A shock decision by the Turnbull government could provide a boost to BlueScope and other steel fabricators in the Illawarra.
In the Federal Senate on Tuesday night Finance Minister Mathias Cormann unveiled changes to government procurement policy.
The changes were made as a trade-off in negotiations with independent Nick Xenophon to push through the government’s controversial Australian Building and Construction Commissioner.
“I have had extensive discussions with Senator Xenophon, for a period in senate estimates but more recently one-on-one in my office, in relation to the government's commonwealth procurement guidelines,” Sen Cormann told the senate on Tuesday night.
“I am pleased to inform the Senate that the government has agreed on some improvements to the Commonwealth Procurement Rules.”
The key “improvement” will see contractors effectively required to favour Australian providers.
“We will be requiring officials to take into account the economic benefit of a procurement for Australia as part of their decision-making process,” Sen Cormann said.
We cannot see how Australian-made steel cannot be favoured every time.
This will be required for all government procurement above $4 million and comes into force on March 1, 2017.
Other changes include that materials used comply with Australian standards.
Steel campaigner Arthur Rorris said, while this was not the 90 per cent mandate on steel they had been pushing for, it was “a mighty leap forward”.
Mr Rorris said it gave the Illawarra steel industry a big leg up when it came to competing with foreign steel.
“If the question of economic benefit is applied, on current market prices of steel, we cannot see how Australian-made steel cannot be favoured every time,” Mr Rorris said.
“The economic impact of steelmaking is so big – and that’s not in contention.
“Steelmaking in particular has got a huge multiplier in jobs and in economic returns that we cannot see how that can be beaten by 10, 20, 30 or 40 per cent in terms of market price.”
But Mr Rorris said “the devil was in the detail” in terms of how the changes were applied.
“If this is coming into effect in March. it’s not going to be very long before it’s put to the test," he said.