The government should be using Australian steel in its projects, but not if it results in being "gouged" by companies, parliamentary secretary for the Illawarra Gareth Ward says.
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Several groups are pushing for legislated minimum use of steel in government projects - one has set it at a 50 per cent minimum, while another wants 100 per cent.
Mr Ward admitted he had concerns with the 100 per cent figure.
"I don't think we should set up the taxpayer to be gouged by Australian companies that are not even trying to be productive or compete," Mr Ward said.
"That's what potentially can happen if you aim for a 100 per cent target."
Mr Ward also said the government should take into account more than just the bottom line when purchasing products.
"My point to the government has been, consistently, price is not the only factor," Mr Ward said.
"The quality of what you buy is also important. What's the longevity of the product? How long is it going to last? What sort of maintenance is it going to require?
"I think that wherever possible governments should buy from Australian manufacturers. By the same token, we need to make sure we don't rip off the taxpayer in the process. We need to make sure we get value for money."
Mr Ward, whose parents met at the steelworks in 1972, said he had been working to assist steelmaking in the region.
"I've met with representatives from BlueScope on a number of occasions as well as our ministers about the campaign," he said.
"I've spoken with the Premier, the Premier has met with BlueScope and I will continue to advocate for the changes that we need to have a sensible policy approach that recognises comparative advantage and gives our industry the best chance of success."