Nicola Willis wants to change Government procurement rules to help Kiwi companies

Finance Minister Nicola Willis wants to encourage more local businesses to bid for Government contracts. Photo / Mark Mitchell

Finance Minister Nicola Willis is proposing changes to Government procurement rules to make it easier for local firms to win contracts, which are worth $50 billion a year.

Willis has proposed introducing a new economic benefit test for the contracts and wants to scrap 24 rules which she said “put unnecessary obstacles in the path of Kiwi businesses”.

“This is part of our plan to increase jobs and incomes by shifting New Zealand to a faster growth track,” Willis said.

Willis said the economic benefit test would “require government agencies to consider the wider benefit to New Zealand of awarding contracts to New Zealand firms when making procurement decisions”.

“Doing so will create export and employment opportunities and help New Zealand businesses to grow.

The changes will mean that the current rules that agencies must follow when tendering contracts will reduce to 47.

Willis said the rules she proposes to axe are either “redundant or unnecessary, duplicate content, repeat statutory and regulatory requirements or have never been applied in practice”.

“Reducing the number of rules will streamline and simplify the process for New Zealand businesses,” she said.

The proposals are being published for consultation today. Consultation closes on April 8.

Some of the proposed changes will be controversial, including a requirement that contractors pay the living wage in contracts for cleaning, catering and security guard services, purchase office supplies that produce low amounts of waste and/or are recyclable, and purchase battery electric or hybrid electric vehicles.

The last Labour Government included the living wage rule in a 2021 change, which required departments and agencies to pay the living wage to cleaning, catering, and security guard services. As of last September, the living wage was $27.80 and hour.

Willis said many of those requirements will be replaced by the new economic benefit rule.

“The new rule will apply to all goods, services and refurbishment contracts worth more than $100,000 and all construction works worth more than $9 million.

“For contracts below these levels, agencies will be expected to award contracts to New Zealand businesses that have the capability to deliver,” she said.

Thomas Coughlan is deputy political editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in the press gallery since 2018.