Government needs help to define what an Australian business actually is

The Federal Government says it wants to do more business with Australian businesses, but that’s a tricky business.

With so much use of the word ‘business’, the government is seeking to define exactly what it means to be one for the purposes of public sector procurement.

And so it is doing what governments love to do – it is opening a consultation on it all.

Finance and Public Service Minister Katy Gallagher said the consultation has been launched as part of the government’s Buy Australian Plan and is seeking input from industry and the public to develop a definition of an Australian business for Commonwealth procurement processes.

She said the government was committed to supporting Australia’s home-grown businesses to thrive and prosper.

“This is an important step which will give us better data on how procurement contracts are awarded and how Australian businesses can be better supported,” Senator Gallagher said.

“We will always stand up for local businesses, which employ millions of Australians and contribute enormously to our economy.

“That’s why we’re also investing in local industries and businesses through our policies like the Buy Australian Plan.

“I encourage anyone who is interested to speak up and ensure their voice is heard.”

Currently, there are a range of Australian business-related definitions that have been adopted for different purposes, so Labor wants to nail down exactly what will be required for a business to be regarded as Australian by the government.

The Minister said creating a standard definition of an Australian business will ensure greater transparency around the procurement contracts awarded to local firms and better inform government decision-making.

Industry and Science Minister Ed Husic said the move builds on work already being done to support Australian businesses, which will be further boosted by recognising the benefit procurement brings to the Australian economy, local businesses and workers.

“Bringing clarity to how an Australian business is defined will mean when we say we are awarding money for local procurement, it will flow to the right firms,” Mr Husic said.

“We want a definition that is robust enough to tell when a company is genuinely Australian.

“A new definition will bring confidence and certainty to industry and government.

“This is good for local businesses that provide well-paid, secure jobs to millions of Aussies.”

The Department of Finance has developed the consultation paper, noting that ‘Australian Business’ is not commonly defined in Australian Government legislation or policy.

Neither does the Federal Government have a standard definition of an Australian business that is applicable to all situations.

Instead, it says, there are a range of Australian business-related definitions that have been adopted for different purposes, including at the federal, and state and territory levels.

“This paper provides an overview of the Commonwealth procurement framework and the potential use of an Australian business definition in this context,” it states.

“It also provides information on a range of definitions that are currently being used by government entities and outlines the various factors that could be considered in the development of a definition for use within the procurement framework.

“The Department of Finance invites any interested parties to provide comments and suggestions to inform the development of a definition for an Australian Business for Commonwealth procurement.”

The consultation period will be open for six weeks and will seek feedback on a range of factors to help inform the definition, including where a business is located, where a business is registered to pay tax, and the nationality of business owners or shareholders.

Australia’s international government procurement obligations include non-discrimination commitments, and these commitments are given effect through the Commonwealth Procurement Rules.

“In light of these commitments, the definition of an Australian business could be utilised to analyse contract reporting data for Commonwealth procurement to determine the number and value of procurement contracts being awarded to Australian businesses,” the department’s paper states.

“This data may, in turn, be utilised to inform relevant government activities, such as those that support businesses to better understand how to engage and compete in Australian Government procurement processes.

“Looking at the procurement framework more broadly, the definition of an Australian business may be relevant to procurement-connected policies that refer to Australian businesses, such as the Australian Industry Participation policy which currently specifies a business is Australian if it has an Australian Business Number or an Australian Company Number.”

The definition being developed will need to ensure it gives confidence to both government and industry; is clear, understandable and simple enough to easily apply; and robust enough to exclude businesses that are not genuinely Australian, while not being overly complex or difficult for businesses to meet.

It must also be suitable for procurement reporting; and flexible enough to allow alignment with existing definitions used at federal and states and territories levels and with future government priorities.

The consultation paper can be found on the Finance Department’s website.