Local Purchasing Preference – Western Australia

Date: 10 Dec 2008 | posted in: Retail | 0 Facebooktwittergoogle_plusredditpinterestmail

Note: In 2008, the Australia-United States Free Trade Agreement (AUSFTA) caused the Government of Western Australia to substantially amend its Buy Local Policy to eliminate the preference for regionally produced goods over U.S. exports.  In 2006/2007, the last year in which the policy was fully active, local businesses accounted for 87% of the total value of purchases made by Western Australian government agencies. The information below reflects pre-2008 policy. Follow the links at the end to access both the current policy and earlier, superseded versions.


The Government of Western Australia’s State Supply Commission Act of 1991 (see part 4) set up a State Supply Commission with the authority to draft and implement supply policies for the region. The Commission set about creating a Buying Wisely program. Two of the Buy Wisely policies are “Supporting Local Industry” and “Value for Money”: the principle that when goods and services are purchased, public authorities achieve the best possible outcome for every dollar spent by assessing the costs and benefits to government and the community, rather than selecting the lowest purchase price.

In accordance with the Buy Wisely principles, the Commission recently developed a new Buy Local Policy that outlines the obligations that Western Australia’s government agencies have to meet when purchasing the $2 billion worth of goods, services and works they buy each year. As of November 1, 2000, the agencies must provide price preferences to local Western Australian businesses when they are in competition for regionally based Government contracts. The policy covers all State Government purchasing of goods, services and works, including construction, housing and public buildings, and applies to all State Government public authorities, including government departments and agencies.

Regionalbusinesses located within a prescribed distance from a contract delivery point are eligible to receive a Regional Business Preference and a Regional Content Preference. Local Western Australian businesses located outside the prescribed distance are eligible to receive a Regional Content Preference. However, price preferences are not applied when Western Australian local businesses are in direct competition with bids received from other States or Territories of Australia or New Zealand. In addition, Australian and New Zealand content receives a price preference when in direct competition with imported goods and services. This preference is applied in the form of an impost on imported content. In general, calculating competing bids must use the following formula:

BID = PRICE + IMPORT (x10%) – REGIONAL (x10%)

Due to the Australian and New Zealand Government Procurement Agreement (ANZGPA), regional bid and regional content = 0 when competing with bids from other States of Australia or New Zealand. Regional preferences are capped as follows:

Goods and Services:
– $50,000 for regional businesses total bid.
– $50,000 for non-regional businesses local content.

Construction Works:
– $100,000 ($50,000 for regional businesses preference plus $50,000 local content).
– $50,000 for non-regional businesses local content.

– $500,000 for regional businesses total bid (for first time bids).
– $500,000 for non-regional businesses local content.

Thepolicy also stipulates that government purchasers have the discretion to increase the capping of the preference (eg the maximum value of$50,000) on an individual contract where it can be demonstrated that awarding the contract to a local regional business will provide a measurable economic benefit. Also included in the policy are provisions banning the purchase of dumped imports (as defined by the Australian government) and promoting reverse engineering (the local manufacture of spares and replacement parts for equipment sourced overseas).

More Information:

  • Full Text of the State Supply Commission Act of 1991
  • The Government of Western Australia’s  Buy Local Policy (Both the current policy with the 2008 adenda and earlier, superseded versions of the policy are available via this link.)
  • Buy Local Reports – produced annually by the Government of Western Australia’s State Supply Commission


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Stacy Mitchell

Stacy Mitchell is co-director of the Institute for Local Self-Reliance, and directs its Independent Business Initiative, which partners with a wide range of allies to implement policies that counter concentrated power and strengthen local economies.