The Office of the Industry Advocate continues to deliver on the State Government’s objective of deriving maximum economic benefit from its procurement by placing an increased emphasis on local labour, capital investment and supply inputs as part of tender processes.
It has been acknowledged South Australia now has the most sophisticated, but still relatively simple, appraisal of economic contribution of any comparable jurisdiction.
Purchasing from locally-based suppliers and those who source inputs locally maximises the amount of local labour and capital used, and therefore the economic return to South Australia.
The South Australian Industry Participation weighting system balances the economic benefit to the State as part of a holistic value-for-money assessment.
I can confidently say that increasing the Industry Participation weighting for major projects has changed the buying behaviour of principal contractors. It has created an incentive for businesses tendering for government work to actively pursue local labour and to use local supply inputs wherever possible. I would encourage private businesses to consider whether they, too, can make any changes to their own procurement practices to support economic activity in South Australia.
In November this year the South Australian Government announced a decision to further increase the minimum Industry Participation weighting from 5 percent to 15 percent for all Government tender evaluations of contracts above $220,000. This a strong indication of the importance the Government is placing on the use of local labour.
In addition to this, contracts relating to the $93 million Northern Adelaide infrastructure spend, announced in the 2015-16 State Budget, will require a 20 percent minimum weighting. A 20 percent Industry Participation weighting will also apply to the $985 million Northern Connector project. Both will be supported by a specific Meet the Buyer program and Supplying to Government workshops to be conducted in Northern Adelaide during 2016.
On Wednesday, 25 November 2015, the South Australian Government announced a number of measures designed to secure steelmaking’s future in Australia, including a new Steel Taskforce to work with Arrium and local steel fabricators to create a highly competitive and sustainable industry.
As the Industry Participation Advocate I will work with the Taskforce to design initiatives that ensure steelmakers and fabricators can compete fairly for local contracts. This means all South Australian Government projects will have contract conditions requiring the use of steel that meets Australian Standards and certification requirements, giving the local industry a competitive advantage against lower quality imports. I have been made aware of a number of projects that have ended up costing more in the long run through the use of products that does not meet Australian Standards, so we believe this initiative creates wins on a number of fronts.
The South Australian Government has committed $322,000 towards establishing a third-party audit to ensure the new mandate is adhered to and to support local fabricators wanting to become certified under the National Structural Steelwork Compliance Scheme (SCA).
A forum is planned for early in the New Year to brief design professionals, engineers and other associated disciplines of the importance of local supply inputs as they will be a critical part of specifying materials, standards and outcomes, then considering the economic contribution during the tender evaluation of State Government projects.
Another success story for the Office of the Industry Advocate has been the Meet the Buyer program. Established in September 2013, they continue to provide an excellent opportunity for local businesses to meet with key staff of agencies to promote their particular business.
I would like to thank my staff for their efforts throughout the year and we will continue to do everything we can to maximise the economic benefit to the State from Government expenditure. I would welcome any feedback you have on our work to date.
In closing, I would like to wish you a safe and happy holiday period and a healthy and prosperous new year.
Meet the Buyer goes from strength to strength
The Meet the Buyer program continues to be a huge success, with the last Meet the Buyer event for 2015 being held on the 24 November at the Entertainment Centre attracting well over 220 attendees and representatives from 20 state government agencies. This Meet the Buyer was one of six events held in 2015, including two regional events on the Eyre Peninsula and Limestone Coast.
The Government’s announcement to lift the Industry Participation weighting from five per cent to fifteen per cent for all purchases above $220,000 has created an enormous opportunity for businesses employing South Australian’s.
Through initiatives like Meet the Buyer events, the Office of the Industry Advocate has been promoting competitive and capable local businesses to government purchases and private sector companies delivering contracts on behalf of Government. The Meet the Buyer program will continue in 2016 with a Building and Construction event planned for the 16th March, for more information please visit Meet the Buyer.
Industry Participation a boost for Northern Adelaide
Through the combined expenditure of state and local governments, there is a potential to shape the local market to enhance the opportunities for local businesses and increase jobs. By virtue of its collective size, public procurement is recognised as an important means of implementing government policy in respect of industry development, innovation and the long-term well-being of the economy.
In a boost for northern Adelaide, contracts relating to $93 million of infrastructure spending announced in the 2015-16 State Budget will require a 20 per cent minimum Industry Participation weighting for local jobs. These projects in the north include upgrades to schools, children’s centres and public housing, as well as $55 million over three years to build a new Gawler East Collector Link Road. In addition a new 20 per cent weighting will also apply to the recently announced $985 million Northern Connector project, jointly funded by the Federal and State Governments.
The State Government’s decision to increase the Industry Participation weightings to at least 20 per cent for projects connected to the Northern Adelaide Economic Plan will be supported by engagement with workers in the automotive supply-chain who can transition to work on Government contracts. This now gives the Office of the Industry Advocate the opportunity to put in place a tailored industry participation policy for northern Adelaide which supports jobs and industry development. The Office of the Industry Advocate will run a series of Meet the Buyer events and Supplying to Government Workshops in conjunction with local government focused specially on the projects in the north.
Public service to better understand small business
Feedback received by the Office of the Industry Advocate indicated there is a significant opportunity to improve procurement process so local businesses were seen as partners in driving the economic benefit to the State.
Creating a better value-for-money environment often involves an open communication with current or potential suppliers with purchasing decisions based on strong partnerships and by developing long-term healthy relationships with reputable contractors and suppliers.
The Office of the Industry Advocate recently launched the first of a series of workshops titled Commercial Acumen – How does your decision affect Small Business. The workshop was conducted by BRS Results and aimed at middle to executive management level government employees. The objective was to expose the attendees to the world of the (small) business owner. The workshop provided a better understanding of the decision-making drivers of the owner, covering themes such as commercial best practice, maximising project and contract performance, risk assessment, understanding costs and profit motivators.
Due to the broad interest across government and the success of the first workshop, further sessions are planned in 2016.
Initiatives in Mid-Year Budget Review to encourage investment grow the economy and create jobs
In the Mid-Year Budget Review the State Government announced it would be delivering new initiatives over the forward estimates to accelerate the Government’s economic plan by encouraging investment, growing the economy and creating jobs.
The announcement identified further measures worth $518 million to promote growth, confidence and investment which directly support over 1,600 new jobs across a range of sectors.
Central to these was the announcement that the Government was bringing forward its first 1/3rd reduction for stamp duty on commercial property transfers effective immediately. This means that as of 7 December 2015 South Australia becomes the cheapest jurisdiction in Australia for the transfer of commercial property.
Other initiatives to accelerate the economic plan and create local jobs include:
- $985 million Northern Connector Road Project
- $208 million for the construction of 1,000 additional houses for the South Australian Housing Trust
- Industry engagement and development programs including $20 million to drive mining exploration investments and jobs
- $19.2 million in last mile road projects to improve freight access around the state
- $12 million to facilitate new tenancies for business at Tonsley
- $10 million to expand the government’s trade efforts.
I would see the Industry Participation Policy applying to many of these new measures and I will be working with the relevant agencies to ensure there is a strong emphasis on local jobs, local investment and local supply inputs. It is important to note the Government’s recent decision to lift the Industry Participation weighting to 15% and in some cases 20% has created an incentive for head contractor’s to use local labour and local supply inputs wherever possible. For more information visit Tax reform - Economic Priorities.