Small business to get a bigger piece of the government pie under new Labor plan

Bill Shorten Labor

Australian Federal Opposition Leader Bill Shorten. Source: AAP Image/Sam Mooy.

Labor will try to ensure small businesses get a bigger piece of the government-spending pie if it wins the upcoming federal election.

Unveiling its Local Projects, Local Jobs plan on Monday morning, the federal opposition said it will require government departments and private firms to support local businesses when dealing with government money.

Under the plan, projects valued at over $10 million will require bidders to develop a local-jobs plan and nominate an on-the-ground contact to engage with SMEs about upcoming tender and subcontracting opportunities.

For projects valued at over $250 million, Labor says local firms will need to be given a “fair opportunity” to win work and not be excluded under industry participation plans which would create new opportunities for SMEs in the mining, rail, road and energy sectors.

“Just like our international athletes compete with the support of the Australian government, our local businesses should be able to rely on the same support,” Opposition Leader Bill Shorten said in a statement alongside several Labor frontbenchers.

“If bidders on large government contracts can’t show they’ll support competitive local business and local jobs, then they shouldn’t be getting contracts. It’s simple — no local jobs, no contract.”

The federal government spends $50 billion a year on goods and services, but the percentage of government procurement given to the SME sector has declined over the last four years.

The announcement has been welcomed by Australian small business and family enterprise ombudsman Kate Carnell.

Small businesses tell us every day they don’t want handouts, they want work. A commitment by the Labor Party to ensure that SMEs get their fair share of work is a step in the right direction,” she said in a statement.

The experience to date is that unless governments regularly audit contracts to ensure large companies and multinationals have delivered on their promise to engage small business, it regularly doesn’t happen,” Carnell said.

Today’s announcement is expected to be just the first SME-focused policy the opposition unveils in the lead up to the federal election this year after the Coalition made small business a policy priority late last year.

It follows confirmation from Shadow Treasurer Chris Bowen in the SMH today that Labor will keep small business in cabinet if it wins the next election.

The policy will also require government departments to work with local firms in a bid to ensure they benefit from government contracts.

Labor has committed to working with industry groups on the appointment of supplier advocates in “key sectors” such as rail and steel, which it hopes will open up new opportunities for SMEs.

However, Carnell has also warned there will need to be an adequate follow-up to ensure big businesses don’t “screw” SMEs over.

“The other issue that needs addressing is to ensure big businesses don’t ‘screw’ SMEs in the supply chain by reducing the amount paid to small businesses and lengthening payment times. We see this all the time,” Carnell said.

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