The federal government’s broad definition of an Australian business is hurting the country’s economic complexity, a group of local defence, technology and space companies collectively worth more than $5 billion have warned.
In a submission to a consultation on what makes an Australian business, the Sovereign Australian Prime Alliance (SAPA) said that including multinational subsidiaries in the definition diminishes the effectiveness of policy aimed at uplifting Australia’s industrial capability.
The group consisting of NIOA, DroneShield, Macquarie Technology Group, AUSTAL and Gilmour Space argued that subsidiaries of foreign-owned multinationals “are necessarily vested in advancing the industrial capabilities of their home nations first and foremost”.
Under the Commonwealth procurement framework, there is currently no agreed definition of what it means to be an Australian business.
Recent changes to the definition of sovereign defence industry capability also limits the importance of Australian ownership.
According to SAPA, the government should adopt a definition “requiring majority local ownership, control, and governance”, which it says is similar to provisions in the European Union, India and the United States.
“By focusing on majority local ownership and control, our definition ensures that procurement spending — when required — can be directed to support businesses that are fully invested in Australia’s future, rather than foreign subsidiaries that also have offshore interests which they must prioritise,” the submission reads.
SAPA warns that defining an Australian business solely on having an active Australian Business Number or an Australian Company Number would be obstructive to delivering on objectives to uplift sovereign capability.
Australia’s international economic complexity ranking is 93rd out of 133 countries, according to the Atlas of Economic Complexity produced by researchers at Harvard University, due to a lack of diversity and uniqueness of the country’s exports.
The submission also warns that the Buy Australia Plan could direct government procurement towards “‘maximising opportunities’ for businesses including” Spain-headquartered ACCIONA, China Communications Construction Company-subsidiary John Holland Group, and US-based Lockheed Martin Australia.
Chinese telecommunications giant Huawei, which has an active ABN, “could be used as a potential example of how solely using an ABN definition could work against the interests of Australian companies, national security concerns notwithstanding”.
The ABN-based definition would also make it difficult to deliver the Future Made in Australia policy’s aim to “secure Australian supply chains and build local capabilities in areas such as clean energy, defence, and critical technologies”.
The group also argues that the existing definition is leading to a deterioration of “a shared sense of endeavour which Government and industry should have, and which is seen in other advanced economies and key trading partners”.
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