A strategic public procurement policy for NZ?

Victoria University's Barbara Allen asks if such a policy would benefit or hamper the private sector

Does a sustainable procurement policy make sense for New Zealand? Earlier this week, Newsroom ran an article in which Environmental Choice New Zealand called on the Government to leverage its buying power to increase the availability of sustainable products and technology, suggesting that New Zealand was 10 or 20 years behind the rest of the world. About a year ago, a similar article ran on the same topic. I suspect many people would be surprised that the New Zealand Government does not have such a policy and is not a leader in this field.

There are many positive arguments for such a policy. The notion of ‘clean’ and ‘green’ runs deep in this country and it would certainly be an opportunity to drive sustainable solutions through the market and into practice. 

Governments everywhere have the demand-side clout to have substantial impact on what gets made, imported and used at the business and consumer level. Most of the renewable energy advancements in the world have been driven by governments willing to put their research and buying power behind early experiments with wind, waves and solar generation of electricity, as well as technologies that make more effective use of energy when it is used, such as water-source and ground-source heat pumps and combined heat and power. 

Economist Mariana Mazzucato has argued in her book The Entrepreneurial State that proactive governments must lead the ‘green revolution’ and in fact have always led innovation, with the private sector leaning heavily on investments made by the public sector.

New Zealand’s small organisations and active networks have in fact been the leaders in this area. The Sustainable Business Network has undertaken the SBN Smart Procurement project that helps businesses consistently practise sustainable procurement, partnering with a number of businesses to collaboratively improve their supply chains. The Akina Foundation, as a social enterprise, has helped to train government procurers in better contracting, and the Ecolabelling Trust, itself owned by government, has led on environmental choice licensed products, making them at least similarly priced to non-environmentally labelled products. Auckland Council has a ‘Sustainable Procurement Framework’ as part of its procurement policy.

To make real change, however, central government must lead in an area where it holds influence over thousands of contracts that deliver goods and services. 

The problem is that government procurement is all things to all people. Procurement can leverage activity in nearly every area of policy. For example, it can shape local economies and employment – by making apprenticeships or local hiring mandatory within government bids; it can and has influenced health and safety standards by including these within tenders; it can actively promote human rights (see the UK Modern Slavery Act). 

Can New Zealand have a procurement policy that does all these things, while still retaining its flexible rules-based (as opposed to legal framework) approach, and ensuring a vibrant, cost-efficient private sector? The more requirements that are integrated into government calls for bids, the harder it may be for small- and medium-sized businesses to reasonably bid on work and compete against larger national and multi-national companies that have the resources to employ bid writers and take on early losses for later wins. New Zealand, of course, is also actively involved in negotiating trade agreements and has to have careful thought as to what these agreements will and will not allow us to do.

There is a lot of work to be done here. Ongoing concerns by organisations such as the Wellington Regional Economic Development Agency (WREDA) with respect to small company access to government business provide further impetus to the fact something needs to be worked out. Perhaps New Zealand needs an overarching Strategic Procurement Policy that could drive these activities in a coordinated, evidence-based way – or if not a policy then certainly a way in which to address concerns.  

New Zealand’s government procurement is already world-class, and there is an opportunity here to solve the vexing outstanding issues that hamper procurement systems everywhere.

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