October 23, 2012
The South Burnett Regional Council will try to put an extra $6 million a year into the pockets of South Burnett businesses by introducing changes to its purchasing policy at November’s general meeting.
The Council’s current Procurement Policy provides a 5 per cent preference to local businesses for the supply of goods and services under $50,000, and a 2.5 per cent preference for amounts between $50,001 and $150,0000.
But under the proposed new policy, these preference rates would alter to:
- 10 per cent for amounts of $25,000 or less
- 7.5 per cent for amounts between $25,001 and $50,00
- 5.0 per cent for amounts between $50,001 and $100,000
- 2.5 per cent for amounts between $100,001 and $150,000
At this month’s SBRC meeting, councillors heard that a study of 2010-2011 expenditures found the Council had spent a total of $54 million.
$16 million was spent on staff wages; $16 million purchasing goods and services from local businesses; and $16 million on items which couldn’t be sourced within the region and other costs, including superannuation and income tax.
This meant there was a pool of $6 million remaining that could potentially be spent with local businesses.
Mayor Wayne Kratzmann has made it clear since his election in April that he’s strongly in favour of the council spending as much as possible locally.
He told a Kingaroy Chamber Of Commerce meeting in July that a change to the way Council purchased goods and services was “in the works”.
“Council is obliged to get best value for the ratepayers, so we need to seek three quotes on everything,” he said.
“But when three different local suppliers are able to meet our needs, then I don’t think we should be looking outside the region. And from now on, the only time Council will buy outside the area is when something can’t be sourced here.”
“The simple fact is that our local businesses employ local people, and they make a great contribution to our quality of life in many other ways. So I think they deserve Council’s support in return.”
However SBRC’s Manager of Financial Services Karen Aspinall has warned that the change – if passed – may not be permanent.
And not all the $6 million Councillors hope to funnel to local businesses could find its way to them if insufficient numbers register on the SBRC’s Preferred Supplier list when a new one is drawn up.
Ms Aspinall told a meeting of local businesses last week that “buying local” was one of the “most troublesome areas” of council purchasing because of the strict rules that now surround local government.
The meeting, held at the Kingaroy Town Hall Supper Room last Wednesday night, was to explain the Local Government Association of Queensland’s own Local Buy purchasing system, which South Burnett businesses can also list on if they want to tender for work with other Queensland councils.
Ms Aspinall told the 25 businesses who attended that “Buy Local” policies were always subject to challenge from businesses outside a Council’s boundaries who could claim that they amounted to unfair competition.
And even if the new local preference rates were passed, Council staff would still need to seek at least one quote from a non-regional supplier “roughly every five or 10 jobs” to ensure businesses weren’t engaging in price-fixing and to satisfy the requirements of internal and external auditors.
Another problem area for staff was that while the Council encouraged local businesses to register their details on the SBRC’s Preferred Supplier list, it couldn’t force them to do so.
A final problem was that once a list was created, it remained in force for two years which could prevent new businesses from being in the bidding pool for up to 24 months.
“The politicians are very much in favour of buying locally,” Ms Aspinall said.
“But as local government staff, we have to work under very strict rules and be accountable for everything we do.”
