The Australian Small Business and Family Enterprise Ombudsman, Kate Carnell has released its COVID-19 Recovery Plan, calling on the government to create a small business procurement panel to level the playing field for small businesses applying for tenders.
The Recovery Plan, which you can access here, is a self-described “beacon of hope for small businesses,” and calls for a number of key changes to improve the legal, regulatory and compliance barriers that a number of small businesses face.
These changes include:
- Abolishing the Fringe Benefits Tax for small businesses.
- The creation of a federal small business claims tribunal alongside the ASBFEO who would provide “triage services.”
- A permanent and instant asset tax writeoff of $150,000 for small businesses.
- The introduction of a Small Business Award.
- Legislating 30-day payment terms for small businesses.
- The creation of a small business procurement panel for any Government contract valued under $10 million.
- Ensuring the least-cost routing for electronic payments be made available to small businesses.
- Amending the Small Business Fair Dismissal Code
Ms Carnell said that “our recovery plan aims to restart the economy by getting people back to work and building economic confidence. Small business is the cornerstone of economic activity- employing over 5 million Australians.”
“Our recommendations cover a broad range of areas including taxation, access to justice, industrial relations and government procurement,” Carnell said. “Trade-offs will need to be made, but ultimately our COVID-19 recovery plan provides the framework to build essential support for Australia’s small businesses and family enterprises and a future that all Australians can be proud of,” she said.
In relation to the ASBFEO’s call for a procurement panel, the ombudsman is hoping that government contracts valued up to $10 million will be offered to the small business panel as part of the tender process, before those tenders are offered to the wider market.
“The government has a golden opportunity to improve its procurement process to support the creation of jobs in the small business sector,” Ms Carnell explained, adding that “the total number of Commonwealth government contracts awarded to SMEs in 2018/19 was 26%.”
“However, 94% of Government contracts are valued under $1 million with 59% below $80,000. It is clear small businesses could have a larger share of that pie,” she said.
“Unfortunately, current Government procurement processes preference large businesses. A procurement system that discourages small business participation, won’t necessarily get the best value and also denies small businesses the opportunity to innovate, employ and grow,” Carnell said.
“I was encouraged to see federal Industry Minister Karen Andrews’ commitment to speak with the Prime Minister about the importance of using government procurement as a lever to building Australian capability and to bolster supply chains in the tech sector,” Carnell added.
“Minister Andrews is absolutely correct. In fact, we believe this should be extended beyond the tech sector to small businesses more broadly, including manufacturing. Small businesses still face significant barriers when participating in government procurement.”
“It can be a costly exercise and small businesses don’t have the resources to complete overly complex tender documentation. The challenges of getting on to a panel in the existing system are onerous. Equally, small businesses are often overlooked on the ‘value for money’ criteria. Just because they might not be able to offer the lowest price, doesn’t mean they are not competitive overall,” Carnell said.
“Lowest cost is not always the best value for money. There’s a strong argument that prioritising Australian small businesses pays dividends to the entire economy,” she concluded.