RESTRICTED  
  
GPA/ACC/AUS/18  
 
18 October 2016  
(16-5645) Page: 1/9 
Committee on Government Procurement  Original: English  
 
 ACCESSION OF AUSTRALIA  TO THE AGREEMENT ON GOVERNMENT PROCUREME NT 
COMMUNICATION FROM AUSTRALIA  
The following communication, dated 14 October 2016, is being circulated at the request of the 
Delegation of Australia.  
 
 
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The attached responses  to questions from the European Union are being circulated to supplement 
information provided in Australia's Checklist and answers to the European Union 's initial questions 
concerning sub -central procurement. Other questions asked by the European Union sho uld be 
considered in the context of Australia's revised offer.  GPA/ACC/AUS/18  
 
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  AUSTRALIA'S REPLIES TO THE EUROPEAN UN ION'S INITIAL ASSESSMENT O F  
AUSTRALIA'S FIRST MA RKET ACCESS OFFER  (GPA/ACC/AUS/15)  
1  GENERAL  
The EU considers that the offer submitted by Australia to GPA is a good offer, 
comparable to Australia's commitments in Australia/Japan FTA ("JAEPA"). However, the 
EU considers that some modifications are necessary. The coverage of Annexes 2 and 3 
needs to be improved with the addition, respectively, of lower level e ntities and of 
"Government business enterprises" ("GBEs"), in particular in the utilities sectors.  
 
As previously advised, GBEs are not covered under Australia 's procurement framework. GBEs 
operate essentially as a company, being required to earn at least a commercial rate of return to 
justify the retention of assets in the business, and to pay commercial dividends from those 
returns. Australia 's limited number of GBEs operate independently of other government entities, 
but may be subject to strategic contr ol from relevant government ministers. The directors of a 
GBE develop business strategies and handle day -to-day management policies, including 
procurement. For these reasons, Australia is unable to offer GBEs.  
 
The notes should be limited to what is stric tly necessary and fully justified, while in 
most cases Australia simply referred to the existence of similar or identical notes in 
pre-existing free trade agreements. Some general notes with substantial carve -out 
(such as, for example, on motor vehicles) s hould be eliminated.  
 
The N otes in Australia 's offer are strictly necessary in the context of our government procurement 
framework, and in -line with the N otes of other GPA members. Australia has s ought to clarify or 
streamline N otes wherever possible in it s revised offer.  
 
In addition, the legislation in States and territories providing for "Buy Local" 
requirements (such as programmes in Northern Territory, Western Australia, Tasmania 
and a new trend in Victoria) and various preferential treatment programm es (such as in 
South Australia, Queensland and New South Wales) should be fully aligned with GPA 
provisions.  
 
State and Territory "buy local " schemes comply with Australia 's commitments in the GPA.  
Elements of some States ' "buy-local" or SME participation schemes may require Australia 's Note 1 
to Annex 7 to ensure their full compliance. These schemes do not stop foreign companies from 
winning contracts in Australia, but seek to ensure that Australian SMEs have an opportunity to 
participate in government pro curement contracts.   
 
3  ANNEX 2 - SUB-CENTRAL GOVERNMENT ENTITIES  
 
Thresholds  
355,000 SDR (as the United States and Canada) which is higher than EU thresholds 
under GPA (200,000 SDR). We request Australia to lower its thresholds to the level of 
the EU one s. 
 
The current thresholds are within the range of those offered by GPA members and consistent with 
Australia 's FTA commitments.  
 
Entities  
The entities' offer is limited to government entities of States and Territories. The list of 
covered entities for ea ch State/Territory is similar to those in JAEPA when agency 
reorganisation is taken into account.  
 
i. Lower sub -central levels such as cities are not covered. There are around 
570 local governments in Australia, including large ones such as the Sydney GPA/ACC/AUS/18  
 
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  and Bri sbane City Councils. The EU requests Australia to consider an 
appropriate coverage of lower levels such as cities.  
Australia cannot offer local or municipal level government procur ement markets. 
Approximately 90% of procurement in Australia is undertaken a t the Commonwealth 
and State and Territory levels.  
 
ii. The EU would also like to receive confirmation as to whether universities 
and hospitals are covered, if not, the EU requests that Australia covers 
universities and hospitals.  
Coverage varies between Stat es and Territories. The revised table below sets out the 
coverage by State and Territory. Universities in a number of States and Territories 
are standalone entities and not subject to government procurement processes.  
 
Sub-Central  Public Universities  Public Hospitals  
Australian Capital Territory    
New South Wales    
Northern Territory    
Queensland    
South Australia    
Tasmania    
Victoria    
Western Australia    
 
iii. Utilities, railways and other transport related areas (such as road 
constru ction and ports) fall under the responsibilities of States and 
Territories. However, only a limited number of entities (mainly transport) 
are offered in Annex 2. The EU requests Australia to offer, in Annex 2 or 3, 
the main entities (including public under takings) operating in the utilities 
sectors such as water, electricity, transport, railways, airports and ports.  
iv. Some replies by Australia indicate that these entities operate on a 
commercial basis, or that they are privatised. Australia should clarify 
further, for those entities that Australia claims are privatised and therefore 
cannot be covered, the criteria used to claim that they are privatised but 
some of them still operate in monopolistic markets. Given these entities' 
close association with State go vernments, Australia should provide more 
details on how the procurement policies of such entities work, for example 
the legal basis that ensures they do not discriminate.  
A significant proportion of Australia 's airports, ports and rail infrastructure has b een 
privatised, or leased to private operators for long periods. Australia 's market access 
offer covers entities responsible for public transport in all jurisdictions with the 
exception of the Northern Territory and Tasmania . 
 
Specific to States/territorie s 
Australian Capital Territory  
In addition to what is requested under 2., the EU requests Australia to cover water 
supplies such as Iconwater.  
 
Icon Water Limited is a "territory -owned corporation " under the Territory -owned Corporations Act 
1990 (ACT).  It is an unlisted public company run on a commercial basis, and is not subject to the 
application of the ACT's government p rocurement framework.  
 GPA/ACC/AUS/18  
 
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  The explanation concerning the exemption for utilities service does not fully clarify the 
rationale for such exe mption, which appears to be very broad. Australia should explain 
further.  
 
The ACT 's utilities are provided by ActewAGL which is a joint venture between a government 
owned corporation (that acts on a commercial basis) and a privately owned company.  The 
Territory purchases gas and electricity through commercial retail supply contracts.  The ACT 
government has no authority to direct the joint venture 's procurement decisions.   
 
New South Wales  
Australia did not provide a sufficient explanation as to why more th an 140 agencies are 
on the website of NSW but only 39 are offered. We would ask Australia to provide an 
estimate of the value of the procurement of the non -covered entities, so that we can 
evaluate how significant the exclusion is. In addition to what is r equested under 2., the 
EU requests, in particular, that Australia covers ports such as for example, the Sidney 
Port and the Port Authority of New South Wales; and water such as Hunter Water 
Corporation, NSW Water and Sidney Water Corporation.  
 
There are a number of NSW Government websites that list all NSW government agencies, as well 
as state owned corporate entities, the latter of which, are not subject to NSW Government 
procurement policy. The particular entities listed above are all government owned cor porations 
operating on a commercial basis.  The NSW Government does not directly control the procurement 
decisions of these entities.  
 
Note 2 : As to the Transport for NSW's exception, Australia claims it refers to legacy 
projects commenced under the Transp ort Construction Authority and the Country Rail 
Infrastructure Authority. However, the exception is broadly formulated. Transport 
Construction Authority was responsible for railway projects in the city of Sydney and 
Country Rail Infrastructure was responsi ble for the management of the railway network 
in rural New South Wales. We would ask Australia for more information as to which 
contracts are intended to be excluded, also the new ones concerning railway networks? 
Australia should specify which percentage of the procurement of Transport for NSW 
would be interested by the exemption.  
 
There is no new procurement being undertaken by those legacy bodies, with all new procurement 
for rail and transport infrastructure now undertaken by the entity, Transport for N ew South Wales 
– which is covered by Australia 's offer. The contracts intended to be excluded are ancillary 
contracts supporting the main legacy projects – long term leases to run certain rail lines disclosed 
on the public websites and final annual reports  of those entities.  These ancillary contracts relate to 
issues such as advertising agreements on the rail lines, agreements for the use of certain 
intellectual property rights for technology specifically related to those legacy projects and heritage 
licenc es to restore parts of the lines no longer in use.  
 
Northern Territory  
In addition to what is requested under 2., the EU requests, in particular, that Australia 
covers water and electricity companies such as Power Water Corporation and ports such 
as the D arwin Port Corporation. In addition we would like to request that the 
Department of Infrastructure and the Department of Transport are covered.  
 
The Power Water Corporation and Darwin Port Corporation are state -owned corporation. They are 
separate legal en tities operating on a commercial basis. They are not subject to government 
control over their procurement decisions. The Port of Darwin was recently leased to a private 
company for 99 years.  
 
Australia is not a position to offer the Northern Territory Depa rtment of Infrastructure or 
Department of Transport.  
 
Note 1 : Any agency in NT can use the services of Charles Darwin University. As the core 
outcomes of the partnership between NT and Charles Darwin University are very broad GPA/ACC/AUS/18  
 
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  (research, education, trainin g), the EU requests Australia that the scope of this carve 
out is further limited.  
 
The partnership between the Northern Territory and Charles Darwin University is limited in its 
scope and is focussed on areas of commonality in research and workforce devel opment in the 
higher education, vocational education and training sectors. Australia considers the scope of this 
exception to be very limited and has negligible impact on the market access coverage provided by 
the Northern Territory.  
 
Further information on these procurement arrangements can be found on the following website: 
http://www.cdu.edu.au/government/procurement -policy.html . 
 
Queensland  
The Queensland's list includes "Entities  declared to be departments pursuant to section 
14 of the Public Service Act 2008" which we understand correspond to the entities in the 
check list. Australia should provide the full list of the currently covered entities that is 
laid down in the checklist . 
 
Entities covered by Queensland 's part of the market access offer are:  
 
 Department of Aboriginal and Torr es Strait Islander Partnerships;  
 Department of Agriculture and Fisheries ; 
 Department of Communities, Child Safety and Disability Services, including : 
 Office for Women ; 
 Department of Energy and Water Supply ; 
 Department of Environment and Heritage Protection ; 
 Department of Housing and Public Works ; 
 Department of Infrastructure, Local Government and Planning ; 
 Department of Justice and Attorney -General, i ncluding:  
 Office of Liquor and Gaming Regulation ; 
 Office of Fair Trading Queensland ; 
 Queensland Corrective Services ; 
 Department of National Parks, Sport and Racing, including:  
 Queensland Parks and Wildlife Service ; 
 Department of Natural Resources and Mines ; 
 Public Safety Business Agency* ; 
 Queensland Fire and Emergency Services ; 
 Queensland Police Service ; 
 Queensland Treasury, including:  
 Office of State Revenue ; 
 Queensland Government Statistician 's Office ; 
 Department of Science, Information Technology and Inn ovation ; 
 Department of State Development ; 
 Department of Tourism, Major Events, Small Business and the Commonwealth Games ; 
 Department of Transport and Main Roads ; 
 Motor Accident Insurance Commission* ; 
 Nominal Defendant* ; 
 Public Service Commission* ; 
 Public T rust Office* . 
Entities covered in part : 
 
All procurement undertaken by the Department of the Premier and Cabinet is covered except 
procurement related to the arts and the Office of the Queensland Parliamentary Counsel.  
 
Procurement related to the Queenslan d Ambulance Service, which is a part of Queensland Health . 
 
* These entities are not departments pursuant to section 14 of the Public Service Act 2008 (Qld) 
but have been included in the offer.  
 GPA/ACC/AUS/18  
 
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  In addition to what requested under 2., the EU requests that Australia covers entities 
operating in water, energy, ports (and that are not privatised) mentioned in Australia's 
replies. Those are for example, (for water) Sunwater Limited and Seqwater, (for energy) 
Energex and Ergon energy,(for railways)  Queensland Ra il and (for ports): Far North 
Queensland Ports Corporation Ltd, Ports North, Gladstone Ports Corporation Ltd, North 
Queensland Bulk Ports Corporation Ltd and Port of Townsville Ltd.  
 
The utilities listed are state -owned corporations that act on a commercia l basis. The Queensland 
Government does not directly control the procurement decisions of these entities.  
 
In addition, TransLink is an agency of the Department of Transport and Main Roads to 
coordinate and integrate bus, ferry and rail services. The EU c onsiders that Australia 
should cover this.  
 
TransLink is a part of the Department of Transport and Main Roads which is a department 
pursuant to section 14 of the Public Service Act 2008 (Qld). TransLink is therefore covered as part 
of Queensland 's offer.  
 
Note 1 : The exception appears to be too broad and should be limited. The EU asks 
Australia whether they can consider limiting it to the procurement of health and 
education services etc. and not to any contract by agencies in those fields.  
 
Australia is not  in a position to narrow the notes relating to Queensland. The notes for each State 
and Territory are limited to those critical to the operation of their procurement systems.  
 
In addition, Australia claims that Queensland does not have Buy Local policies but 
indicated a "Charter for local content". According to the information on the website, the 
Chart provides "opportunities" for local businesses in some important cases. The Chart 
applies to some strategically significant procurement as determined by the procuring 
government agency, or in cases where Queensland Government grants more than 
$2.5 million and in case of large infrastructure projects where funding of over 
$20 million is provided by the Commonwealth through the Queensland Government.  
 
 What does this mean concretely? Are foreign enterprises not allowed to bid for 
those abovementioned cases?  
The Charter does not prevent foreign businesses from tendering for procurements 
subject to the Charter , nor does it  require or give preference to the use of lo cal 
suppliers. Page 2 of the Charter states , "The charter is not a matter of mandating that 
government agencies use local suppliers. Rather, it is about providing a mechanism for 
government agencies to effectively and efficiently give consideration to a wi de range of 
potential suppliers when making decisions relating to major procurements. " 
 
Principle 5 under the Charter requires that government agencies also comply with 
Australia 's international trade obligations. The Charter is consistent with Australia 's other 
government procurement commitments in FTAs.  
Australia should clarify which advantages are given to local businesses and how can this 
be compatible with GPA.  
 
As described above, the scheme seeks to encourage local businesses to participate and ensu res 
that the bureaucracy provides timely information and reasonable opportunity for local suppliers to 
tender. There is no preference or bias towards local companies and Queensland 's scheme is 
consistent with GPA obligations.  
 
South Australia  
In addition t o what is requested under 2., the EU requests in particular Australia to 
cover the main entities in the fields of: water such as SA Water, energy such as 
Renewables SA, railways such as National Rail Corporation and ports that are not 
privatised.  
 GPA/ACC/AUS/18  
 
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  The EU i nvites Australia to clarify if Flinders port is the owner of the port or the 
contractual operator and if this could be covered, and if Adelaide Metro is covered. The 
EU understands that this is covered; in that case Australia should specify this clearly.  
 
Adelaide Metro is covered as part of the Department of Planning, Transport and Infrastructure.  
 
As previously advised, SA Water is a government owned corporation. It has an independent legal 
entity and the South Australia Government does not directly contr ol its procurement decisions.  
 
Renewables SA is part of the Department of the Premier and Cabinet (DPC) which is listed in the 
SA Government 's market access offer . The electricity market in S outh Australia  has been 
privatised and cannot be included in its market access offer.  
 
Non-metropolitan railways are provided by National Rail Corporation (Commonwealth Government) 
and not part of the S outh Australia  Government. Interstate passenger and freight services are 
owned and operated by private companies.  
 
Adelaide Metro is Adelaide 's public transport system, run by the Public Transport Services Division 
of the Department of Planning, Transport and Infrastructure (DPTI). Its services include bus, trains 
and trams throughout the greater metropolitan area (Adelai de Metro) and regional bus services 
(Bus SA / Connect SA). The DPTI is included in SA Government 's market access offer.  
 
Similar to the electricity market in SA, the operation of the key commercial ports in S outh 
Australia has been privatised , with Flinder s Ports Pty Ltd the private operator. Flinders Ports 
operates Port Adelaide; Port Giles; Wallaroo; Port Pirie; Port Lincoln; Thevenard; and Klein Point. 
Flinders Port is a private company that holds a 99 -year land lease and port operating lease for the 
Port of Adelaide and six regional ports.  
 
Tasmania  
In addition to what requested under 2., the EU requests in particular Australia to cover 
the main entities in particular in the fields of water (such as Tasmanian Irrigation PTY, 
Taswater) or electricity (suc h as Hydro Tasmania) or airports/ports (Tasmanian Ports 
Corporation PTY, Metro Tasmania PTY), railways (Tasmanian Railways PTY and TasRail) 
or transport (TT -Line company).  
 
The entities listed are government -owned corporations. They operate on a commercial  basis and 
the government does not directly control their procurement decisions . 
 
We understand that Tasmania Tourism has been offered in TPP and therefore the EU 
asks Australia to cover it.  
 
Australia can agree and has included Tourism Tasmania  in its rev ised market access offer.  
 
The EU requests more information in particular about Tasmania's Buy local policy which 
appears to be among the most stringent ones. For procurement valued at more than 
A$50000 but below A$250 000, agencies must seek at least one quotation from a 
Tasmanian business where local capability exists. For procurements valued at A$250 
000 or more, at least one tender from a Tasmanian business is required.  
 
 What happens if there is no Tasmanian business available? Is it allowed to have 
a procurement process with the exclusive participation of foreign companies?  
 How does Australia intend to make this compatible with GPA provisions?  
The Tasmanian "buy local " policy is compatible with GPA obligations.  The policy does not mandate 
the use of Tas manian businesses nor preclude businesses from any country from submitting a 
tender or winning a contract. The policy is aimed at ensuring that local businesses are given the 
opportunity to tender and that, where applicable, consideration is given to how T asmanian SMEs 
might be encouraged to contribute to any winning tender. Whether a Tasmanian business submits 
a tender or not, the decision -making process is based on the same criteria, and open to all GPA/ACC/AUS/18  
 
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  suppliers equally. The policy expressly states the need to adhere to Australia 's international trade 
obligations.  
 
Victoria  
In addition to what is requested under 2., the EU requests Australia to cover the main 
entities in the fields of water (such as Melbourne Water and Barwon Water) or 
airports/ports (such a s Port of Hasting Development Authority and Port of Melbourne 
Corporation) or transport/railways (Public Transport Victoria, VicRoads and VicTrack).  
 
The entities listed are  public non -financial corporations . They operate in a competitive 
environment, gene rate their own revenue and receive little or no government funding. The 
Government does not directly control their procurement decisions.  
 
The EU would like to obtain more information on the change in Victoria's Industry 
Participation Policy, which introdu ced mandatory local requirements: for certain 
transport projects there is a 100% local steel requirement; the government will set a 
level of local content requirements on a case by case basis for "strategic projects" —to 
be noted that the thresholds for def inition of strategic projects has been lowered under 
Victoria Industry Participation Policy to A$50  million as of July  2015.  
 
 How does Australia intend to make this compatible with GPA obligations?  
As per Australia 's previous response (GPA/ACC/AUS/9) t he Victorian Industry 
Participation Policy ( VIPP) does not discriminate between local and foreign bidders but 
seeks to promote local SME participation in government projects. The policy does require 
tenderers for projects over $50 million (a  VIPP strategic pro ject) to commit to sourcing a 
minimum amount of "contestable " (available) local content  as part of the contract . The 
local content requirements set for each project will look at what goods and services can 
be sourced from local SMEs. This is consistent wit h Australia 's market access offer 
including the note 1 to Annex 7 on SME policies.  
 
The EU question refers to certain transport projects where there  is a 100% local steel 
requiremen t. This is assumed to be a reference to the partially completed Victorian 
Government level crossing removal project . This project does  have as a criterion that 
manufactured steel products used as inputs to the project are sourced from local SMEs. 
This is consistent with Australia 's market access offer including the note 1 to Anne x 7 on 
SME policies.  
 
Western Australia  
In addition to what is requested under 2., the EU requests in particular Australia to 
cover the main entities in the fields of water (Water Corporation, Aqwest) airports/ports 
(for example Mid West Ports authority), electricity (Western Power, Synergy and 
Horizon) and transport (such as Metropolitan Redevelopment Authority).  
 
The entities listed are government -owned corporations, with independent boards and 
management. They operate on a commercial basis and the govern ment has no direct control over 
their procurement decisions.  
 
Department of Transport is not listed, but its two subordinated agencies (Main Roads 
and the Public Transport Authority) which appear to have responsibility for construction 
and operational mat ters are listed. The EU requests Australia to cover the Department of 
Transport.  
 
Australia can agree to the request and has added the Western Australian Department of Transport 
to its revised market access offer.  
 GPA/ACC/AUS/18  
 
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  As there is no clear reasoning for asking  the reservations for multi -supplier list which 
seems to be incompatible with GPA, the EU requests Western Australia to change its law 
to make it compatible with GPA or, eventually, to ask for some temporary measures.  
 
Western Australia requires this narro w exception from the obligations in Article IX, particularly 
"where a supplier that is not included on a multi -use list submits a request for participation in a 
procurement based on a multi -use list… a procuring entity shall examine the request  …", because  
of the unique challenges to maintaining transport infrastructure such as roads and bridges in 
remote locations , over vast distances , and with regular extreme weather events. Western Australia 
does not have the resources to run a qualification process for suppliers not pre -qualified after a 
call for tenders from a multi -user list has been issued and still maintain timeliness of maintenance 
or repairs to such public infrastructure. The exception  does not preclude any supplier from making 
an application to jo in a multi -use list.  
 
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