Answers to Questions

SOUTH AUSTRALIAN GOVERNMENT INDUSTRY PARTICIPATION POLICY

175 Mr HAMILTON-SMITH (Waite) (9 February 2011) (First Session). With reference to Budget Paper 4, volume 1, page 2.7, Highlights 2009-10, South Australian Government Industry Participation Policy—How many South Australians jobs were specifically generated from this program?

The Hon. T.R. KENYON (Newland—Minister for Manufacturing, Innovation and Trade, Minister for Small Business): I am advised that the Industry Participation Policy was first introduced in 2005, to provide full, fair and reasonable access to South Australian businesses to gain work on state government infrastructure and construction projects.

This policy is implemented by the Industry Capability Network South Australia (ICNSA). In 2009-10, ICNSA was working with 21 projects which fit within the scope of the IPP. IPP plans identified how the relevant state government agency would provide local businesses with full, fair and reasonable access to work on specific projects.

During 2009-10 only the Department for Transport, Energy and Infrastructure (DTEI) project to upgrade the Belair Line completed IPP project reporting. It resulted in 164 local companies, and 29 national companies with a local office, winning contracts on the project with an overall value of $10 million.

A revised Industry Participation Policy came into effect on 1 July 2012. It aims to strengthen the requirements for major project proponents to provide full, fair and reasonable opportunities for local suppliers to compete for work. It builds on this government's support for business and targets small to medium enterprises, which are the vast majority of local suppliers of goods and services.

The new policy requires successful tenderers and major project proponents to identify and report on how they will ensure local suppliers will be provided with full, fair and reasonable opportunities to compete for work.

The new IPP is forecast to provide a fivefold increase in financial benefits to the state as compared with the previous policy. In particular, it will help the state realise the benefits of the mining boom and create opportunities to promote and grow our capable firms in all sectors, but especially in manufacturing. This benefits not only our small to medium-sized enterprises; major project proponents will stand to gain as well. It is often more cost effective to use local businesses with strong local knowledge.

The policy is a result of extensive consultation and responds to a call from the Economic Development Board to review the previous Industry Participation Policy and to introduce greater accountability for large projects. Advice from former thinker in residence Professor Göran Roos is that the approach taken is consistent with an increasing trend for jurisdictions to use public procurement as a tool for achieving industry innovation and research policy objectives.

The new IPP broadens the range of projects covered, including significant contracts for goods and services, while lowering the commencement threshold for regional projects. It also introduces a tiered approach to ensure compliance costs are appropriate for the size of the contract. The new policy will apply to:

South Australian government procurement of goods and services, including infrastructure and construction, with a value of over $5 million in metropolitan Adelaide and over $3 million in regional centres (previously this was $5 million state-wide);

all public-private partnerships;

federally-funded infrastructure and construction projects managed by the South Australian government;

private sector projects receiving significant South Australian Government support—that is, over $2.5 million in cash or in kind—or an indenture agreement; and

projects seeking major development status under section 46 of the Development Act 1993.

Importantly, the new policy will now form part of the tender assessment process. Industry Participation plans will count for a minimum weighting of two percent in the tender evaluation stage; although agencies may choose to increase this as appropriate. In addition, the IPP requires increased accountability and transparency particularly for larger scale tenders and projects. Reporting on the implementation of the IPP will be a contractual obligation for successful tenderers and recipients of government support.

The introduction of the new policy is intended to not only assist local businesses but also show project proponents the benefits from engaging with local innovative and world class businesses.

The extended scope of the revised IPP has seen significant activity captured beyond the Construction and Infrastructure projects covered by the previous policy. This includes significant service contracts for SA Housing, medical equipment for SA Health, advertising services for the SA Tourism Commission and computing services for the Office of the Chief Information Officer.

The ICNSA is the state government's key agency for facilitating local industry participation in major projects, and is a business unit of the Department for Manufacturing, Innovation, Trade, Resources and Energy. ICNSA assists tenderers to locate capable local suppliers and develop Industry Participation Policy plans. ICNSA also assists agencies with the application of the policy to their applicable projects.

To further support local industry participation, in February 2013, the state government established the Industry Participation Advocate to review impediments that local companies may face when tendering for government contracts.

Mr Ian Nightingale was appointed to this important position. He has a wealth of experience through senior positions at Primary Industries and Regions SA and as the inaugural Chief Executive of the Department for Planning and Local Government.

The advocate is working with:

industry associations and business to increase the number of opportunities that local companies can bid for;

the state procurement board to ensure that its policies and practices are not disadvantaging local businesses; and

the Commonwealth and other State governments to reduce impediments in those jurisdictions that South Australian companies may face when bidding for their tender contracts.

To support this work, the government is providing $440,000 over two years for the Industry Participation Advocate to assist businesses better position themselves to respond to government tenders and to help government agencies simplify their procurement processes and make it easier for businesses to bid for government work.