Government Flags Possible Procurement Changes to Stimulate Industry

23 Apr 09

The federal government can buy locally produced goods to support Australian jobs without breaking world trade rules, Industry Minister Kim Carr says.

Senator Carr said he supported the idea of government procurement to help the nation's manufacturing industry.

"One area that I believe could benefit from some fresh thinking is government procurement," the minister told the Society for Australian Industry and Employment conference in Melbourne on Tuesday.

"It comes as no surprise that the global downturn has prompted some to suggest we should be using government procurement to support Australian industry.

"This is an idea that appeals instinctively to many working Australians, but in public policy it is reason rather than instinct that should be our guide."

Reserve Bank governor Glenn Stevens on Tuesday said the Australian economy was already in recession.

Senator Carr said World Trade Organisation rules did not prevent countries supporting their small and medium-sized businesses, including through government procurement.

"They permit local preference in the supply of certain goods and services, including research infrastructure.

"The same is true of our free trade agreements."

Senator Carr said encouraging Australians to buy locally made products did not mean "shutting our trading partners out".

"Australia exported $1.7 billion worth of iron and steel last year," he said.

"We can't afford to compromise that or any of our other manufacturing exports by ring-fencing the Australian economy."

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