General policy statement
This Bill will require the Ministry of Business, Innovation, and Employment to amend the Government Procurement Rules and Principles of Government Procurement to make job creation and the overall benefit to New Zealand a determining factor in their decision making. It will also require government organisations to design contracts so that companies focused on job creation have a fair chance of winning them, and then oblige them to report on the value of contracts they have awarded based on this criteria.
The government spends $40 billion a year on procurement. That is huge buying power, but currently, government bodies only consider their own bottom line when they make purchasing decisions. They buy ‘cheaper’ options regardless of the impact on New Zealand, even if it means Kiwis will lose work.
It’s costing Kiwis jobs and it’s denying New Zealand businesses the opportunity to innovate and grow. For many SMEs the lack of government contracting experience is a hindrance when firms try to break in to international markets.
We have seen too many jobs lost because of government organisations buying ‘cheap’ options from overseas. Examples include, the Hillside closure and asbestos in imported rail wagons, and Kiwi businesses shut out of the up to $1.9 billion IRD computer system rebuild.
These changes will mean more jobs and economic opportunities for New Zealand. It creates a more level playing field for overseas and local companies to compete for government tenders.
There is little to no fiscal cost to this policy. It will stimulate the economy, boosting government revenue. Any additional costs that individual government organisations face will be considered in their funding applications.