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New NSW procurement policy

07 July 2009

The New South Wales Treasurer announced in its June 2009 state budget a measure which would subsidise local public procurement bids by up to 20% over non-local rivals.  This measure is not endorsed by the Australian Federal Government and if implemented, would appear to risk breaching Australia’s commitments under the WTO, its FTAs (including with the US and other parties) and the CER Agreement with New Zealand. 

In particular, the 1997 CER Government Procurement Agreement requires all government bodies in Australia and New Zealand to accord “services, goods and suppliers of the other Parties equal opportunity and treatment no less favourable than that accorded to their own domestic services, goods and suppliers” and “opportunities for ANZ [Australia and New Zealand] suppliers to compete for government business on the basis of value for money and avoid purchasing practices which are biased in favour of foreign goods and suppliers”.  The predecessor of that Agreement, signed in 1991, had permitted New South Wales to apply a “preference margin” of up to 20%, when assessing offers to supply goods or services.  It appears that the new NSW policy is being proposed notwithstanding the 1997 abolition of such a margin.