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Russel Northe MLA:
Local Ė What is Local?

Local businesses, contractors, sub-contractors and suppliers are given a "fair go" on Government led projects and in the procurement of goods and services.

By Portal Admin - 1st June 2020 - Back to News

Member for Morwell Russell Northe is calling upon Government at all levels to ensure local businesses, contractors, sub-contractors and suppliers are given a "fair go" on Government led projects and in the procurement of goods and services.

"Everyone who knows me, knows that I am extremely passionate about the use of local businesses and local contractors on Government projects, but unfortunately that same passion has led to much frustration over the years", Mr Northe said.

"In my reckoning the word "local" is used very loosely by Governments and against the perception of what our community would define as being "local" said Mr Northe

Last year I appointed a Parliamentary Intern in Tom Boucher-Hill to investigate, "The Efficacy of Local Construction Participation in State Funded Construction Projects in the Latrobe Valley Region".

"Tomís report was highly valued by myself and many local contractors who have felt that for far too long local enterprises are not being afforded the opportunity to participate or even bid for Government work in their own community." Mr Northe said.

"Subsequently, I have penned an opinion piece to highlight how Governmentís use of the word "local" can be extremely misleading, whilst also offering suggestions as to how local businesses can get a fair go on Government projects" said Mr Northe

"Now, more than ever, I believe it is so important to get Government procurement policies correct because at the moment our business community is missing out on many opportunities when they most need it", Mr Northe concluded.



Now, more than ever, I believe that it is time our local businesses, contractors, subcontractors and suppliers should be given every opportunity to participate in Government-led projects within Latrobe City. We have been blessed that Latrobe City has benefited from significant Government investment over recent years and we look forward to that continuing.

However, for a long time I like many have become increasingly frustrated at the number of lost opportunities for local builders and contractors who have been overlooked for work, or even worse - denied the opportunity to even tender for works within their own community, in which they pay rates and taxes.

The problem in my view, lies with procurement processes that often refer to local and local content, but really what is the definition of local? Unfortunately, local is defined differently, depending on who you ask.

But how many people realise that the definition of "local" by State and Federal Government standards, is actually applicable to all of Australia and New Zealand?

To many people, Latrobe City and the towns within is referred to as local, which seems logical: it is a Local Government area after all. And then we have the Latrobe Valley which many would perceive as being the same area as Latrobe City. However under State Government guidelines, the Latrobe Valley area is actually defined as being inclusive of the Local Government areas of Baw Baw, Latrobe City and Wellington Shires.

I'm happy to stand corrected, but I would have thought that the good residents of Sale, Yarram, Warragul or Drouin would not identify their place of residence as the Latrobe Valley. So why is this a problem? In part it has allowed Governments to use the Latrobe Valley as a vehicle to announce that a local builder has been appointed to undertake a project within Latrobe City boundaries. This is despite the same builder or company being based outside of Latrobe City, our Local Government area.

An example in recent times was the appointment of a Warragul builder to construct the $4.3 million Latrobe Youth Space Centre in Morwell. The announcement of the successful tenderer included news that a local builder had been selected. But is it really local as many residents in Latrobe City have pointed out to me? I certainly donít cast any aspersions upon the building firm appointed and Iím sure they are a terrific organisation; however, one has to question why a Latrobe City builder would not be building the Latrobe Youth Space centre in Morwell. Rather ironic, I would have thought.

Are we really saying that there is no commercial builder in Morwell, Moe, Churchill or Traralgon and surrounds who is unwilling or not capable of undertaking this project? Now I confess I donít know all the background for this project, such as was this a public tender; did any Latrobe businesses submit a tender, or were any Latrobe businesses notified to the project? Again, I donít criticise the successful tenderer I just raise the point that whereby this municipality, the Latrobe municipality has suffered significant hardship in recent years with major businesses closing their doors, and the fact that we are going to have to contend with enormous economic hardship given the COVID-19 pandemic, shouldn't we be doing everything possible to support this same local community when opportunities like this arise?

There are major projects underway within Latrobe City at the moment and I commend all levels of Government including the State Government for their investment and commitment. Some of those projects mean that the principal contractor appointed may not be based in Latrobe City and this is understandable for a number of reasons including the fact that no local entity to my understanding has accreditation to perform State or Federal Government projects in the scope of $15 million or more. What is critically important however is that local sub-contractors and suppliers are given the opportunity to participate in these same works. Unfortunately, this has been the subject of some consternation from Latrobe City based builders and contractors over a period of time, including how effective local content has really been.

On these large-scale projects, the principal contractors will generally use local motels and frequent cafes, restaurants, pubs and clubs which is really important and this should be valued and respected. And itís not to say that local contractors have a right to every Government project within Latrobe City. There might be times when Government projects require certain skills that are not able to be delivered locally. There might be times where local contractors donít wish to submit a tender. There might be times that the costs of a local contractor is greater than what is fair and reasonable, but what I would say is that locals should be afforded the opportunity at the very least to participate in Government projects in their local community, and indeed strong local weighting should apply as part of the procurement and tender process.

The Victorian Government has a "Local Jobs First" policy. In name it sounds wonderful but in practical terms it doesnít deliver on the perception that the majority of people would have in their minds as to what is deemed local. Over a period of time I have been approached by many local contractors who have shared their frustrations in regards to the system that exists and its failure to recognise true local content. Last year, I engaged a Parliamentary Intern to undertake research into the efficacy of local construction participation in Statefunded construction projects. The report undertaken by Tom Boucher-Hill Ė which is well worth reading Ė and it highlighted how the system really is failing local contractors in many respects.

Just last week, I drew attention to a project in Traralgon which involved the fit-out of a building for WorkSafe; a State Government authority. It had come to light that this project, (which was said to be worth approximately $1.5 million), would proceed without any opportunity for local builders to even tender for this same work. WorkSafe had determined that it would select a builder from its preferred contractor list; which does not include any local builders and it also determined it would not undertake a public tender process for these same works. As I mentioned at the time, this is simply disgraceful and makes an absolute mockery of the notion of local on Government projects. How many other similar projects have fallen through the cracks over the years - one has to wonder?

I just cannot fathom that in a community that has endured economic downturn, with already high unemployment, and faces significant employment and economic challenges due to COVID-19 that no local business has been afforded the opportunity to quote or tender for Government work in its own backyard. People might ask why should Latrobe City be viewed differently and I would point out the reasons above, plus the fact that we are unique. Unlike the majority of other municipalities, the State Government derives tens of millions of dollars each and every year from the resource sector in our community, including a $252 million increase in coal royalties just four years ago. Local businesses pay rates and they pay taxes so when Government related projects occur within the community in which these same business owners and their employees work and live, then why shouldnít they be given an opportunity to at the very least submit a quote or tender.

To summarise, I raise four points that I believe can assist to address these matters; First, the description of local, local content and Latrobe Valley requires urgent review in the context of Government projects. These three definitions are confusing and misleading. It is little wonder people residing in Latrobe City scratch their heads when the builder of a Government project is announced as local when the perception is completely different in the local community. If the definition of local in Government language is Australia and New Zealand, then this terminology is completely wrong and it needs to change.

Second, an adequate weighting should apply for businesses and contractors based within Latrobe City and apply to Government work within our community. If a stronger weighting system is geared towards local contractors, then we should see more locals participating in local projects. In addition, local contractors should be afforded the opportunity to not only be informed of projects that are occurring in their local backyard but have the opportunity to tender and participate. As per the WorkSafe example raised earlier - this is simply not happening.

Third, there needs to be transparency in relation to the use of contractors on major Government funded projects within our community. This should include the public listing of contractors and suppliers, which requires an explainer outlining why locals have not been utilised if this is the case. This should be a documented publicly and in turn, I believe this will exert pressure on the principal contractor to use the services of local sub-contractors and suppliers.

Fourth, there are a significant number of Government related departments and agencies in our community. Now is a time where each and every single Local, State and Federal Government department and agency based within Latrobe City should urgently review their procurement practices and ensure that the acquisition of goods and services are being done locally where possible. Not in the current Government definition of local but local as in what our community would expect local to be.

In closing, whilst I firmly believe all levels of Government are doing their absolute best in difficult circumstances, it is the local procurement and local content policies that have existed under Governments of all persuasions over a period of time that need urgent reviewing in my opinion. We have a fantastic business community in Latrobe City and there is no reason why it shouldnít be supported to thrive. Itís important that we all continue to support our local business community where can. They are the ones that employ local people, they are the ones they provide local services, and they are the ones who support our local schools, sporting clubs and other organisations. Likewise, itís about time that Government procurement policies at all levels better recognised our local business community and ensure that local businesses have adequate opportunities to participate in Government led projects and in the provision of goods and services in their own backyard.


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