An overhaul of the Government's procurement rule is a win for small Kiwi businesses.
The Finance Minister is scrapping 24 requirements and adding a new economic benefit test.
BusinessNZ's Katherine Baird says this is an important move for the future of New Zealand's business sector.
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Speaker 1 (00:09):
You're listening to a podcast from Newstalk ZB follow this
and our wide range of podcasts now on iHeartRadio.
Speaker 2 (00:16):
Talking about proposed changes to procurement rules to make it
easier for New Zealand businesses to excuse me for government tenders.
On the phone right now is Catherine Beach. He's the
director of Advocacy at Business end Z. Very good afternoon
to you, Catherine.
Speaker 3 (00:31):
Good afternoon, Catherine.
Speaker 4 (00:33):
How hard is it for a New Zealand company to
win a government contract?
Speaker 3 (00:38):
Look, it can be very challenging, particularly for small to
medium sized businesses. And I couldn't tell you how many
explorers I've spoken to that I have success internationally in
selling their goods and services, but they can't actually sell
here to our government at home. So yeah, this is
a hugely important move and we're big advocates for it.
Speaker 4 (01:02):
Is that because you know, the hoops you've got to
go through to get one of these contracts is so expensive,
take so many people and so long, and only really
really giant companies have the bandwidth to do that.
Speaker 3 (01:18):
Look, that's definitely part of the challenge. It's expensive to
enter into tenders and typically if there's just one that's
going to take the price, then all the others have
put a lot of time and energy into sunk costs
really that they can't recover. So that's definitely one of
the issues. But I think also, you know, we've we
(01:42):
had a bit of a lease cost mentality in government procurement,
so you just buy the cheap buy on the cheapest price,
and that doesn't take into account quality or local support
and servicing. So we've advocated, you know, they should be
looking at the whole life value of what they're buying.
Speaker 2 (02:00):
Clearly is step in the right direction, as you say, Catherine,
But going from seventy one rules to forty seven rules,
forty seven rules still sounds like a very big number.
Is there still more work to do here?
Speaker 3 (02:10):
Do you think it does sound like a big number,
doesn't it? And I think the difficulty with the rules,
to be frank is you can have a bunch of
rules that say things that we think sound good, but
how do you actually get procurement managers at the cold
face to interpret those rules and you know, do the
(02:30):
right thing by Keeley businesses. So I think the approach
that they're outlining looks a lot better to me that
a procurement manager would be required to do the economic
benefit test, and I think that'll just put it to
the front of their mind. You know, what jobs could
be created, how much tax will this company pay and
(02:50):
sort of factor that into their decision making.
Speaker 4 (02:53):
Do they need any rules at all?
Speaker 3 (02:57):
Look, I think you do need some rules, and some
of the rules are about just good hygiene factors, you know,
so how to be fair and transparent with procurement. And
you know, I don't think any of this is intended
to shut out international participants in our supply chains, because
we need them as well, but it might encourage them
(03:18):
to team up with local businesses for that tier two
or Tier three level supplier.
Speaker 2 (03:25):
Do you know how we compare to other comparable countries
in terms of those government tenders. Do we make it
a lot harder than other countries to support our own businesses?
Speaker 3 (03:35):
I think absolutely we do. So the team Business New
Zealand had a look at some other countries and how
they approach it. We looked at Australia, we looked at
Canada and the United Kingdom, and they all have much
more proactive ways of ensuring that their local businesses get
a fair you know, a fair go at winning some
(03:57):
of that business. They're much more proactive. I think New
Zealand's always you know, probably tilted to the other directions.
I think this will be a good change.
Speaker 4 (04:09):
In terms of how waiting the cost towards New Zealand companies.
When you take into account you know, the ability to
build you know, build companies in New Zealand, and you
know the tax advantages and all that kind of stuff.
How much do you think it should be weighted in
the cost? Is it ten percent?
Speaker 3 (04:27):
Look, I think that's be interesting. The submissions are open,
and I hope that a lot of businesses put submissions in.
We certainly will be I think, you know, maybe ten
or twenty I think, you know, you have to be
fair to the buying agency and to the taking care
of tax payer money, that there has to be a
(04:47):
good process that they go through. But I think, you know,
giving a ten or twenty percent waiting to the local
business will just bring it to the procurement manager's attention.
It means that they kind of have to evaluate it.
So I think just it's getting getting the business the
local businesses on those people's radars. They still have to
(05:07):
compete with everybody on the other eighty points or ninety points,
So I think that keeps it all on us. But
I think it'll just really mean procurement managers have to
look at local and at least give them good consideration.
Speaker 4 (05:21):
As a sort of a chicken and egg thing. We
don't support local businesses so they don't have the scale,
so then we don't use them.
Speaker 3 (05:30):
Absolutely. Look, it's fifty one billion dollars spend. I've long
argued that how do we grow bigger companies in New
Zealand on the five million population. That's super difficult. We
need our businesses to get into bigger projects, to have
the confidence to invest in people, in plant and equipment.
(05:52):
How do you do that? You get them involved in
bigger projects. Who does bigger projects? That's central government.
Speaker 2 (05:58):
Catherine, thank you very much for your time this afternoon.
Really appreciate it.
Speaker 3 (06:03):
Thank you.
Speaker 2 (06:03):
That is Catherine bed, Director of Advocacy and Business in
z More.
Speaker 1 (06:08):
From News Talk set B. Listen live on air or online,
and keep our shows with you wherever you go with
our podcasts on iHeartRadio
You're listening to a podcast from Newstalk ZB follow this
and our wide range of podcasts now on iHeartRadio.
Speaker 2 (00:16):
Talking about proposed changes to procurement rules to make it
easier for New Zealand businesses to excuse me for government tenders.
On the phone right now is Catherine Beach. He's the
director of Advocacy at Business end Z. Very good afternoon
to you, Catherine.
Speaker 3 (00:31):
Good afternoon, Catherine.
Speaker 4 (00:33):
How hard is it for a New Zealand company to
win a government contract?
Speaker 3 (00:38):
Look, it can be very challenging, particularly for small to
medium sized businesses. And I couldn't tell you how many
explorers I've spoken to that I have success internationally in
selling their goods and services, but they can't actually sell
here to our government at home. So yeah, this is
a hugely important move and we're big advocates for it.
Speaker 4 (01:02):
Is that because you know, the hoops you've got to
go through to get one of these contracts is so expensive,
take so many people and so long, and only really
really giant companies have the bandwidth to do that.
Speaker 3 (01:18):
Look, that's definitely part of the challenge. It's expensive to
enter into tenders and typically if there's just one that's
going to take the price, then all the others have
put a lot of time and energy into sunk costs
really that they can't recover. So that's definitely one of
the issues. But I think also, you know, we've we
(01:42):
had a bit of a lease cost mentality in government procurement,
so you just buy the cheap buy on the cheapest price,
and that doesn't take into account quality or local support
and servicing. So we've advocated, you know, they should be
looking at the whole life value of what they're buying.
Speaker 2 (02:00):
Clearly is step in the right direction, as you say, Catherine,
But going from seventy one rules to forty seven rules,
forty seven rules still sounds like a very big number.
Is there still more work to do here?
Speaker 3 (02:10):
Do you think it does sound like a big number,
doesn't it? And I think the difficulty with the rules,
to be frank is you can have a bunch of
rules that say things that we think sound good, but
how do you actually get procurement managers at the cold
face to interpret those rules and you know, do the
(02:30):
right thing by Keeley businesses. So I think the approach
that they're outlining looks a lot better to me that
a procurement manager would be required to do the economic
benefit test, and I think that'll just put it to
the front of their mind. You know, what jobs could
be created, how much tax will this company pay and
(02:50):
sort of factor that into their decision making.
Speaker 4 (02:53):
Do they need any rules at all?
Speaker 3 (02:57):
Look, I think you do need some rules, and some
of the rules are about just good hygiene factors, you know,
so how to be fair and transparent with procurement. And
you know, I don't think any of this is intended
to shut out international participants in our supply chains, because
we need them as well, but it might encourage them
(03:18):
to team up with local businesses for that tier two
or Tier three level supplier.
Speaker 2 (03:25):
Do you know how we compare to other comparable countries
in terms of those government tenders. Do we make it
a lot harder than other countries to support our own businesses?
Speaker 3 (03:35):
I think absolutely we do. So the team Business New
Zealand had a look at some other countries and how
they approach it. We looked at Australia, we looked at
Canada and the United Kingdom, and they all have much
more proactive ways of ensuring that their local businesses get
a fair you know, a fair go at winning some
(03:57):
of that business. They're much more proactive. I think New
Zealand's always you know, probably tilted to the other directions.
I think this will be a good change.
Speaker 4 (04:09):
In terms of how waiting the cost towards New Zealand companies.
When you take into account you know, the ability to
build you know, build companies in New Zealand, and you
know the tax advantages and all that kind of stuff.
How much do you think it should be weighted in
the cost? Is it ten percent?
Speaker 3 (04:27):
Look, I think that's be interesting. The submissions are open,
and I hope that a lot of businesses put submissions in.
We certainly will be I think, you know, maybe ten
or twenty I think, you know, you have to be
fair to the buying agency and to the taking care
of tax payer money, that there has to be a
(04:47):
good process that they go through. But I think, you know,
giving a ten or twenty percent waiting to the local
business will just bring it to the procurement manager's attention.
It means that they kind of have to evaluate it.
So I think just it's getting getting the business the
local businesses on those people's radars. They still have to
(05:07):
compete with everybody on the other eighty points or ninety points,
So I think that keeps it all on us. But
I think it'll just really mean procurement managers have to
look at local and at least give them good consideration.
Speaker 4 (05:21):
As a sort of a chicken and egg thing. We
don't support local businesses so they don't have the scale,
so then we don't use them.
Speaker 3 (05:30):
Absolutely. Look, it's fifty one billion dollars spend. I've long
argued that how do we grow bigger companies in New
Zealand on the five million population. That's super difficult. We
need our businesses to get into bigger projects, to have
the confidence to invest in people, in plant and equipment.
(05:52):
How do you do that? You get them involved in
bigger projects. Who does bigger projects? That's central government.
Speaker 2 (05:58):
Catherine, thank you very much for your time this afternoon.
Really appreciate it.
Speaker 3 (06:03):
Thank you.
Speaker 2 (06:03):
That is Catherine bed, Director of Advocacy and Business in
z More.
Speaker 1 (06:08):
From News Talk set B. Listen live on air or online,
and keep our shows with you wherever you go with
our podcasts on iHeartRadio
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