What It Means to Be an 'Australian' Business – and Will It Help SMEs Win Government Contracts?
Following our post on 20 September 2024 (What Does It Mean to Be an ‘Australian’ Business?), the Commonwealth Government has now announced its updated definition of an "Australian business" under the Buy Australian Plan (source).
What Qualifies as an 'Australian' Business Under the New Definition?
Under the updated definition, a business is classified as "Australian" only if it meets the following criteria:
50% or more Australian ownership
Principally traded on an Australian equities market
Australian tax residency
Principal place of business located in Australia
Industry and Science Minister Ed Husic stated that these changes are aimed at helping smaller Australian businesses compete fairly against large multinational firms for Government contracts.
“These changes help smaller Australian businesses have a fair crack, providing genuine competition against big multinational firms for government contracts.”
With the Commonwealth Government’s $70 billion annual procurement budget, the potential impact on SMEs (small and medium-sized enterprises) could be significant. But will this really help SMEs win more government contracts?
Will SMEs Truly Benefit from the New Definition?
While many see this as a positive step toward supporting Australian businesses, we at Bid Wizard remain skeptical.
The key issue? The updated definition does not address the fundamental compliance barriers that prevent SMEs from successfully bidding for Government contracts.
In a recent article published in Inside Small Business (source), our founder, Richard W. Smith, highlighted the real reasons why SMEs struggle to secure Government work. These include:
Excessive insurance requirements that exceed industry standards
Complex compliance and reporting obligations
High costs associated with bid submissions
Structural Reform Is Still Needed
Simply tweaking the definition of an ‘Australian’ business does not level the playing field for SMEs. If the Government truly wants to increase SME participation in public procurement, it must address the structural issues in the tendering process.
Key areas for reform should include:
Simplifying compliance requirements for SMEs
Reevaluating insurance mandates to align with industry norms
Reducing the cost burden of preparing and submitting bids
Creating a more transparent and SME-friendly procurement process
Final Thoughts
While the updated definition of an ‘Australian’ business under the Buy Australian Plan is a step in the right direction, it falls short of providing genuine opportunities for SMEs. Without tackling the underlying compliance challenges and financial barriers, many small businesses will still find it difficult to compete for Government contracts.
For real change, further structural reforms are necessary. Until then, SMEs should remain informed, explore alternative procurement strategies, and advocate for policies that truly support their participation in Government tenders.
For more insights on government procurement and bid strategies, stay connected with Bid Wizard. Got questions? Contact us today!
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