Aust, state preferences

Press, 22 June 1984, Page 16

Aust, state preferences

Negotiations between New Zealand and Australian states about Government purchasing may soon be simpler. Since the Closer Economic Relations agreement came into force, state purchasing practices in Australia have been treated as a contentious matter by some New Zealand manufacturers. Each state Government uses a system designed to favour manufacturers within its state. A preferential loading system is used so that an Australian state Government, or local authority, is prepared to pay more for a supply from within the state, or from another state, than it is for goods from a foreign supplier. The preferential loading varies from state to state, but a typical one might be a 10 per cent preference to favour in-state suppliers. That is, a state department might be prepared to pay up to 10 per cent more for goods or services from a local supplier. New Zealand had to be fitted into the system and the treatment varied from state to state. Some treated New Zealand as another state, which gave New Zealand manufacturers a preference over other foreign suppliers. Some states tried to find a place for New Zealand in between being another state and being a foreign country. The simplification has come about because New South Wales, Victoria, and South Australia are believed to have agreed to treat the manufacturers in each of their states in the same way. No preferential loading will apply among these three states. The decision is reported to have been taken in Hobart- last Friday at a meeting of the state Ministers of Industry and the Federal Minister. The New Zealand Minister of Trade and Industry, Mr Templeton, attended the meeting. The three states had long been discussing the move; Victoria and South Australia have long treated

one another’s manufacturers as in-state suppliers and New South Wales would be included in that system.

The three states include the great bulk of Australian industry. Queensland, Western Australia, and Tasmania can be expected to press for the arrangement to extend to them as well. New Zealand might find it easier to deal with the three south-eastern states together, rather than with each separately. From the point of view of the New Zealand manufacturer, no external tariff applied by the Australian Government has to be paid, but the New Zealand supplier has been at a disadvantage in dealing with state customers because of the preferential loading. This loading has had an effect similar to an extra tariff. Tariffs are being reduced under the terms of C.E.R.; the preferential loading has remained. Tendering for Government and local authority purchasing in Australia is attractive to many New Zealand manufacturers; but they dislike tendering at a disadvantage. The New Zealand Government argued that New Zealand should be treated by Australian states as an instate supplier, but was rebuffed. It was more successful in arguing that New Zealand should receive the same treatment that is accorded another state of the Commonwealth. Presumably this will continue in the meantime. Queensland, or Western Australia, could be expected to be indignant if New Zealand were treated as an in-state supplier and they were not. Until they are embraced in a common pool, New Zealand will not get the equality it seeks. Eventually, the loading may be dropped altogether among all the states. At this point, New Zealand should have an undeniable case for the same treatment. The agreement reported to have been reached last Friday is a step on the way.