Government Procurement

Ms DIGANCE (Elder) (14:27): My question is to the Minister for Small Business. Minister, can you inform the house about how the industry—

The Hon. A. Koutsantonis: I'm listening.

Ms DIGANCE: It's to you. Can the minister inform the house about how the Industry Participation Advocate is working with local government to encourage councils to adopt industry participation principles in their procurement activities?

The Hon. A. KOUTSANTONIS (West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy, Minister for Small Business) (14:27): I thank the member for this question and her keen interest in supporting small business, being a former small business owner, or current small business owner herself. Growing the economy, jobs and the diversification of declining industry sectors has been front and centre for the South Australian government in recent times, and I am sure that many local councils are concerned with similar issues in their communities.

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, of course, the long-term wellbeing of our economy. Public procurement is an essential mechanism for the delivery of the government's broader economic and social objectives. Strategic public procurement, focused on creating employment and economic development, can also establish confidence in the market.

Since the creation of the role in 2013, the Industry Participation Advocate—which was going to be abolished under the opposition if they were successful—has worked to meet three fundamental objectives:

to build the capacity of local businesses to successfully tender for government contracts;

to recommend changes to policy and practices that remove impediments to local industry participation; and

to initiate procurement reforms that provide greater economic benefit to the state and local businesses.

The state government has made significant reforms to procurement policy over the past two years, based on recommendations from the Industry Participation Advocate, with a view to maximising the economic benefits from government expenditure. Through the combined expenditure of state and local governments, our potential to shape the local market is enhanced.

The government is one of the largest, if not the largest, buyer of goods and services in our local economy. The Industry Participation Advocate has invited the local government authority and each local government chief executive officer to collaborate to develop a consistent approach across both levels of government, promoting industry participation and its benefits for South Australian business.

The IPP takes effect with $22,000 worth of procurement with an emphasis on local jobs associated with the contract. Above $1 million in regional areas and $4 million in metropolitan Adelaide, an Industry Participation Plan is required and, in addition to jobs, the economic benefit to the state from capital investment and supply inputs are also assessed. For larger projects, or in more specialised areas, the Office of the Industry Advocate works closely with the purchasing agency to develop a tailored Industry Participation Plan. The standard weightings can also be lifted in circumstances where the expenditure can be used to stimulate the economy, create new industry development opportunities and to attract investment.

We can confidently say that South Australia has now the most sophisticated, but still relatively simple, appraisal of economic contribution of any jurisdiction and has a weighting system that balances the economic benefit to the state as part of a holistic value-for-money assessment. With the support of local government, applying this system across council procurement will create even more jobs and opportunities for South Australian employees and businesses. I urge councils to work collaboratively with the government and the Office of the Industry Advocate to try to develop these broader plans.