An official definition of what constitutes an ‘Australian business’ for government procurement purposes has been introduced for the first time by the federal government.
An official definition of what constitutes an ‘Australian business’ for government procurement purposes has been introduced for the first time by the federal government.
Under the new definition, a business will be considered Australian for procurement purposes if it: has 50 per cent or more Australian ownership or is principally traded on Australian equity markets; has Australian tax residency; and has a principal place of business in Australia.
For partnerships, 50 per cent of more of each class of partnership interest must be Australian owned, while for trusts, at least 50 per cent of the owners’ securities or assets held in the trust must be Australian for it to be considered an Australian business.
Despite the definition, under Australia’s international procurement commitments, a business cannot be discriminated against in the procurement process based on its size, location, ownership or degree of foreign affiliation.
The definition comes as the government also released ‘broader economic benefits in ICT sector procurement’, which gives ICT sector-specific information and advice for officials to consider the broader economic impacts in ICT procurement.
ICT contracts make up approximately 15 per cent of the average $70 billion spent across 80,000 government procurement contracts each year.
Finance Minister Katy Gallagher said Australian businesses had been calling for the changes for some time.
“Procurement is one of the most important economic levers governments have; helping to grow our economy, support small and medium businesses, and benefit Australian workers and consumers,” she said.
“Being able to easily identify Australian businesses in tender processes will help make them more competitive, and guide future initiatives to better support them.”
Industry and Science Minister Ed Husic said the definition would help Australian businesses.
“This new definition helps give confidence that this is the case and helps make the job easier for government officials too,” he said.
“Government is a big potential customer for lots of businesses, especially in our world-class tech sector.
“These changes help smaller Australian businesses have a fair crack, providing genuine competition against big multinational firms for government contracts.”
