Members Bill aims to boost Kiwi industry participation and growth

New Zealand can only control its own future with strong, sustainable local industries and the government needs to ensure we have them, Dunedin South Labour MP Clare Curran said today.

Labour today released the Kiwi Jobs Bill, a Private Members Bill which aims to maximise opportunities for competitive local businesses when tendering for large government projects.

The Bill establishes a Commission of Inquiry to compare government procurement policies in Australia and other comparable jurisdictions, to determine whether the NZ Government can have a policy that gives preference to local procurement without breaching our international trade obligations.

The Commission of Inquiry would have a deadline of six months to report to Parliament and the Minister for Economic Development would be required to decide within 30 days how its recommendations could be implemented.

Clare Curran said New Zealand industries should be given the best possible chance of taking up new work within our shores by getting full, fair and reasonable opportunities to compete for tenders and major projects.

“The Kiwi Jobs Bill is timely and important to provide encouragement and certainty to New Zealand industries that their skills and capabilities are important to our nation and our economic future," Clare Curran said.

“Currently we have a situation with KiwiRail about to embark on a formal tender process to build 13 electric locomotives and 114 ‘cars’ for the electrification of Auckland rail.

“Both KiwiRail and the government have ignored the strong independent economic case by reputable Berl Economics detailing the benefits of having Auckland’s new trains built in New Zealand, which could create up to 1275 new jobs.

“It is currently unlikely that the tender document will contain a preference clause giving a stronger weighting to a build that includes Kiwi content.”

Clare Curran voiced concern at this as most other countries have such clauses giving preference to local companies in tendering for government contracts, including many of New Zealand's trading partners.

“These government procurement policies recognise that value for money is about a broader economic benefit and not just about lowest price,” Clare Curran said.

“Many New Zealand industries would receive a boost from such a policy, including manufacturing, engineering and ICT. For example KiwiRail's Hillside and Woburn workshops, whose skills and capacity would be taken more seriously with preference given to local content.

“Labour is committed to building the NZ economy, and one of the main ways to do that is to ensure our local industries are given maximum opportunities to flourish.

“Our concern is that the current National Government would accept only the lowest-cost bid, writing Kiwi skills off as irrelevant and ignoring them”

BACKGROUND

In this year’s Budget, over $2 billion of capital expenditure was appropriated for projects which could potentially be undertaken by local business.

This expenditure on major public investment includes Broadband Investment and KiwiRail turnaround plan funding. Some of this work is undoubtedly being done locally, however current practice doesn’t allow for this factor to be considered as part of the procurement process.

The previous Labour Government strengthened the Capital Asset and procurement regime, requiring a two stage Cabinet process for significant capital purchases.

These procurement guidelines require a Minister to first take a business case to Cabinet outlining the options for their proposal, followed by a second business case seeking specific agreement of the recommended option. One of these business cases will generally outline which companies may bid for the work and could include a rough estimate of the likely cost.

One of the options for supporting local industry is to amend Cabinet guidelines to require the second business case to include a broader economic analysis of the impact to the domestic economy of proceeding with a domestic provider, where there is one.

But this gives no certainty to local industry and no bottom line that quantifies the notional spill-over benefits, for example, that a dollar spent in NZ has a natural spill-over of, for example, 25 cents to the local economy – which means that an offshore tender would have to be better than 25% cheaper to warrant consideration.

ENDS

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