The use of Government Procurement to support local jobs is becoming increasingly popular throughout the world as the recession starts to bite and unemployment rises.
Government Procurement covers the billions of dollars that governments spend on everything from computers and software, to wood and steel for infrastructure projects, to defence equipment and uniforms for defence, police, customs and other services.
Unfortunately World Trade Organisation rules and Free Trade Agreements prevent counties from completely preferring locally made goods. However it is now acknowledged that previous NZ Governments have not been prepared to stretch the rules enough. And in many cases the local procurement rules have actually discriminated against New Zealand made products.
The National Distribution Union (NDU) has also researched WTO rules and New Zealand’s major Free Trade Agreements and has found that New Zealand can require equipment (including uniforms) for its security services to be made locally. Most other countries are using these clauses to prefer locally made product where possible for their defence forces.
The issue of Government Procurement dominated the beginning of the Government’s Job Summit in February this year, when the owner of Swazi Apparel, Davey Hughes, exposed the fact that he was losing a $2 million defence force contract to China on the eve of the summit. The textile industry, the Green Party and the NDU representing workers at Swazi Apparel immediately urged the Government to change its procurement policies.
"This is an industry full of innovators with ideas to create value-added products for local and international niche markets, but they need these procurement contracts to survive and grow," said Cameron King, a director of Textiles New Zealand . "The Government could stimulate significant growth in the industry if it ensured a percentage of goods and services bought by government departments and agencies were sourced from within New Zealand."
Green Party MP Sue Bradford, who was the previous Government's Buy Kiwi Made campaign spokesperson, said the contract shift was "a stab in the back" for Davey Hughes who had maintained jobs in Levin despite pressure to move offshore. Ms Bradford said US defence forces were required to buy 100 percent American. "The cradle of the free market believes in protecting its local manufacturers - we should do the same," she said. "The Green Party hopes that this episode will trigger an urgent review of government procurement practices and policies."
The NDU called on the Government to stop the contract going to China. NDU national secretary Laila Harre said government procurement processes had to be fixed to save jobs. "Every other country takes a pragmatic approach to applying international trade rules and balances ... New Zealand seems more concerned with being toasted on the WTO (World Trade Organisation) cocktail circuit than putting toast on the table in our provincial centres."
Swazi Apparel has made wet weather gear for troops for the past three years but the defence force said the contract will be cut by 93 percent - more than $1.9 million - this year. Defence Minister Wayne Mapp responded by saying that he would find out what he could do about the contract, which comes up for renewal next year. Dr Mapp said one of the problems was that the main defence force contract was with an Australian company, Yakka Apparel Solutions, and Swazi was a sub contractor. Mapp said that any future contract had to conform with WTO and CER (Closer Economic Relationship) rules, and New Zealand had a free trade agreement with China. "I'm going to look at the rules to see whether we can do better," he said.
Union representatives at the Job Summit were able to ensure that the issue of Government Procurement became one of the top 20 issues from the Summit. Issue 16 adopted by the summit stated; Level the playing field to NZ firms for local and central government procurement.
The government appointed Job Summit participants, NDU national secretary, Laila Harre, and former Jade Software CEO, now Canterbury University Vice-Chancellor, Dr Rod Carr, to work with officials to develop a Government Procurement system that is fairer for local manufacturers. Elizabeth Tennet, the new CEO of the industry development organisation, Textiles NZ, is also working with government officials to ensure that next year’s defence force uniform contract is undertaken in a way that gives a fair go to local producers.
It is to be hope that this work will ensure a much better Government Procurement system in New Zealand that will give local manufacturers a fair go. If this happens then “make it here” will no longer be just a slogan but an entrenched goal of our Government Procurement system.
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