Is buying local misguided?

How much preference should government give to local suppliers when it comes to procurement?
Written by Darren Greenwood, Contributor

How much preference should government give to local suppliers when it comes to procurement?

The New Zealand Opposition wants to see if home-grown businesses can be given first dibs over international ones without breaching international trade obligations. Labour ICT spokesperson Clare Curran has issued a private members Bill, which seeks comparisons of government procurement policies in Australia and elsewhere.

Curran believes that Kiwi software firms would be one of the main beneficiaries of local firms receiving preference, even though her policy would apply to all sectors.

New Zealand does have its own innovative software industry, particularly focussed around Wellington, the capital, and the so-called "Silicon Plains" of Christchurch on the South Island. And as the government tries to simplify its purchasing through shared services and the like, it could be that the smaller local firms are missing out to the international big boys.

But, how do you define what is local? Many of these international giants will have locals on the ground, typically selling through the channel, and often local suppliers will amend an international product.

And, barring a few exceptions, it is unlikely a local supplier could produce something to compete with Microsoft, IBM or whoever. And think about how much the New Zealand industry exports. While we may seek to protect our own software suppliers, what if other countries sought to protect theirs?

By all means let us see what preference might be possible for local suppliers, but we must bear in mind it will have a cost.

Perhaps it is best that we continue to do what we do well, developing specialist and niche systems. We probably cannot compete against the mass market Microsofts of the world, but we can flourish instead by supplying those systems that rely on local knowledge, such as farming software or products for the health and energy markets.

This is why we have free trade, so everyone can benefit most by doing what they do best.

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