A fifth of the federal government’s annual $70 billion of goods and services purchases must be awarded to small and medium-sized enterprises following changes to the commonwealth procurement rules. This represents a doubling of the previous quota for contracts with SMEs.

It’s a key element of Labor’s Buy Australia plan, which formed part of its 2022 election campaign. The policy is underpinned by the belief that the government’s procurement policy is “a major economic lever available to drive the economic recovery from COVID-19”. 

The plan contains a range of initiatives aimed at encouraging procurement from SMEs and First Nations businesses, along with support in other forms such as the ‘pay on time’ policy. A Future Made in Australia office will also be established within the Department of Finance and backed by new laws. 

The appetite for greater SME and Indigenous involvement in government contracts has been building for decades. “It’s fantastic for developing Australian industry and the overall growth of our economy,” says procurement and commercial executive Ben Madgwick. 

Procurement expert Sandeep Agarwal of Partners in Performance agrees, saying: “It will stimulate local communities and provide targeted support to groups and businesses that may not otherwise be able to compete with larger businesses. It also supports building skills within local communities and creating a skill and capability legacy once the major project has concluded.”