NSW is shaking up its $42 billion procurement system, demanding agencies prioritise local businesses or explain why not.

Reforms announced by the Minns Government this week include measures such as the establishment of a Jobs First Commission and the introduction of new “If not, why not” procurement rules. 

These changes are designed to ensure that NSW government agencies consider local suppliers before awarding major contracts.

One of the key reforms involves the scrapping of prohibitions on local content rules, which had prevented NSW agencies from favouring local businesses during the procurement process. 

Minister for Domestic Manufacturing and Government Procurement, Courtney Houssos, said previous restrictions had been damaging to the local economy. 

“The former government's ideological zealotry harmed local industries, local businesses and local workers”" she said. 

Under the new framework, agencies will be required to engage with NSW-based suppliers for contracts valued above $7.5 million. 

If a contract is awarded to a non-NSW supplier, the agency must justify why a local business was not selected.

The government is also introducing the Jobs First Commission, a body designed to oversee compliance with these new procurement rules. 

The commission will have the power to name and shame agencies that fail to meet local content and employment targets. 

In addition, the government is legislating a 30 per cent weighting for local content, job creation, and ethical supply chains in tenders worth more than $7.5 million. 

This aims to drive job creation and support small businesses, aligning with the government’s broader goals of revitalising NSW's manufacturing sector.

Despite the government's positive framing of the reforms, industry and union stakeholders have expressed concerns. 

Some question the feasibility of the workforce requirements. For instance, the Future Skills Guarantee mandates that 20 per cent of tradespeople on major government contracts be apprentices. However, the state faces a shortage of apprentices, which may complicate the implementation of this policy.

Still, many are optimistic that the new policies could help reverse years of offshoring.

The new rules will take effect from January 2025, with further consultations on the Jobs First Commission set for the end of this year.

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