The NSW Government’s latest procurement figures have good news for small business owners who know where to look.
What’s happening: Policy changes under the Minns Labor Government have raised the direct engagement threshold for SMEs from $150,000 to $250,000 and reduced red tape around the tender process, making it easier for small businesses to compete for and win government contracts.
Why this matters: For NSW small business owners, government procurement is one of the most stable and substantial revenue opportunities available, yet many never pursue it.
Government procurement is not a market most small business owners think about actively. But the numbers suggest they should.
In 2024-25, the NSW Government awarded $8.3 billion in contracts to small and medium businesses, representing more than 20% of its total $40 billion procurement program, according to fresh data released by the NSW Government’s procurement report.
Small and medium businesses make up around 40% of private sector employment in NSW, and the government’s procurement strategy is explicitly designed to direct spending toward local firms delivering goods and services across building maintenance, landscaping, office supplies, furniture and business services, among other categories.
“Small businesses are the backbone of our economy,” said Minister for Domestic Manufacturing and Government Procurement Courtney Houssos. “Our reforms are helping local small and medium businesses win a greater share of the Government’s $40 billion spend, supporting local jobs, strong communities and economic development right across the state.”
Importantly, the share going to small and medium businesses has remained steady even as total government procurement expenditure has reduced, in line with the Minns Labor Government’s strategy of fiscal discipline. That reduction included a $300 million drop in spending on consultants, contractors and contingent labour, with savings redirected toward essential public services.
The most immediately practical development for small business owners is a change to how government agencies can engage directly with SMEs.
Under reforms introduced by the Minns Labor Government, government agencies can now purchase directly from small and medium businesses up to a value of $250,000, up from the previous threshold of $150,000 set under the former Liberal-National Government.
The impact is already showing in the data. In 2024-25, 50% of all goods and services contracts between $150,000 and $250,000 were awarded to SMEs, up from 47% in 2022-23 and 48% in 2023-24.
A second red tape reduction is also worth noting. Small businesses can now provide insurance details after a contract is awarded rather than during the tender process itself, removing one of the more common administrative barriers that previously deterred smaller operators from putting their hand up.
For small business owners who have previously found the tendering process too cumbersome or the thresholds too low to justify the effort, both changes shift that calculus meaningfully.
The procurement data also shows improving outcomes for regional and Aboriginal businesses, two groups that have historically been underrepresented in government contracting.
Of the NSW Government’s procurement from small and medium businesses between 2022-23 and 2024-25, the share going to regional businesses increased from 16% to 18%, representing an additional $25 million. For Aboriginal businesses, the share increased from 2.2% to 3.3%, an additional $72 million over the same period.
Minister for Small Business Janelle Saffin said the figures reflect a deliberate effort to ensure the benefits of government spending reach beyond metropolitan centres. “It is incredibly rewarding to see more regional and Aboriginal businesses winning government contracts. This isn’t just about procurement. It’s about ensuring the wealth of our $40 billion spend reaches every corner of the state,” Saffin said.
“Local small businesses are the experts on their own communities. When the government buys local, we aren’t just getting a service. We are supporting local jobs and families. When a small business wins a contract, the entire local economy thrives.”
What is coming in 2026
The Minns Labor Government has flagged further reforms ahead. In 2026, the government plans to establish the Jobs First Commission, introduce a new Local Procurement Policy and launch a replacement program for Business Connect, the existing small business support program.
Saffin said the focus will remain on reducing barriers and increasing accessibility. “By slashing red tape and modernising our Business Connect program, we are ensuring small firms have the best possible chance to partner with government. We are backing the backbone of our economy by making it simpler and faster for local businesses to grow and succeed.”
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