Australian small and medium-sized enterprises have reasons to smile as the Sovereign Australian Prime Alliance (SAPA) broke into a big grin for home business with the Albanese Government’s Commonwealth Procurement Rules (CPR) revolution that is set to be rolled out after its March 6 announcement.
In Canberra, SAPA greeted the reforms as “much needed,” pointing to a new definition of an “Australian business” and an expanded economic benefits measure that can potentially open more government contract opportunities for SMEs—a possible shot in the arm in the $70 billion annual procurement space.
SAPA, an industry promotion group, spelled out the reforms. The updated CPR now defines an “Australian business” as one that is at least 50% Australian-owned (or traded mainly on an Australian equities market), taxed as a resident, and located in Australia.
For SMEs—typically firms with less than 200 employees under current CPR rules—this definition may be a more intense focus on their tenders than for foreign giants. “Definitions are an important foundation,” SAPA stated, arguing that this detail will allow the government to “lead future policies with confidence” towards favoring local players like SMEs.
The second big shift is the “Broader Economic Benefits in Procurement” measure, which SAPA argues will force government buyers to think beyond the cheapest price. Tenders now focus on job creation locally, economic spillover effects at a regional level, and local economic growth—exactly where the skills of SMEs come in handy. Picturing this little technology outfit in Adelaide or Tamworth-based family supplier, their ability to hire locals or stimulate the economies of the locality could prove higher than a cheap quote from an overseas-based firm.
These innovations didn’t result overnight. SAPA attributes the initiative to a Ministerial Working Group, with the big guns of Finance Minister Katy Gallagher and Industry Minister Ed Husic, among others, along with Senator David Pocock’s office input, for devising this bipartisan initiative. They’re riding a wave—since July 2024, the Albanese Government has raised the SME exemption limit to $500,000, enabling agencies to directly procure from SMEs for contracts up to that value, and set 25% of contracts under $1 billion and 40% under $20 million being given to SMEs as targets. In 2022-23, SMEs already took over $20 billion of the procurement slice, and these reforms might cut them an even bigger slice.
For SMEs, the advantage is real but not guaranteed. The new “Australian business” tag fits the majority of domestic businesses—over 99% of Australian businesses are SMEs, as determined by the Australian Bureau of Statistics—but they will need to prove their ownership and residency status in order to be eligible. The broader benefits test is a golden ticket: SMEs can cite their local job or supply chain benefits in tenders, which larger businesses may not be able to replicate. Take a Cairns SME building contractor: if it has 50 locals working for it and purchases materials locally, that’s the story the government now has to consider.
There is, however, a negative. More economic benefit oversight costs money: more bureaucracy—SMEs will need to back up claims with facts, not with what’s hoped. And though SAPA’s goading calls for taking up this model, it’s not mandatory yet, so local SMEs can still have uneven opportunities beyond federal contracts. And the CPR’s reticence regarding SME-specific quotas here (in contrast to prior adjustments) is that it remains an even battle against mid-sized local operators who also fit into “Australian business.”.
However, the tone is upbeat. SAPA’s call to action for SMEs to get ready as these rules become federal tenders, something they’ll help them navigate along with government departments. “This is a common sense solution,” they said, and for SMEs, a chance to turn local roots into contract wins. With the government spending big—$70 billion a year—those who hustle to market their Aussie edge may find 2025 a bumper year.
ALSO READ: Government procurement rigged against SMEs, says ombudsman
Keep up to date with our stories on LinkedIn, Twitter, Facebook and Instagram.
