Ed Husic (Chifley, Australian Labor Party) Share this | Hansard source

Appropriation bills, like the Appropriation Bill (No. 3) 2025-2026 and the related bills, are also about the investment choices that we make as a nation. They tell Australians what we value and the type of future we intend to create. They fund the essential services people rely on. They also shape the way the government participates in and influences the economy through its decisions. Much broader than that too, these bills underpin something we should be talking more about this in this place, and that's government procurement.

Governments always need a lot of goods and services to get things done, so government purchasing power can't be understated. On average, the Commonwealth government procurement program entails around $70 billion and 80,000 contracts committed each year. The question for us is not only whether that money is spent efficiently, though it must be, but also whether it's spent strategically. Does that spend give us bang for buck well beyond the simple purchase of a good or service? Are we taking the opportunity to also use our purchasing power to build sovereign capability? For example, are we giving Australian technology companies a chance to scale here rather than just waving them off to go overseas? Are we strengthening national resilience in the face of rising global uncertainty, and are we prepared to use the enormous economic leverage that procurement provides to build the future we want—dare I say it, a future made in Australia?

In 2023, the Senate Finance and Public Administration References Committee conducted an inquiry into supporting the development of sovereign capability in the Australian tech sector. The committee report states:

The increasingly globalised nature of the tech sector increases the risk of economic disruptions resulting from geopolitical tensions, natural disasters, pandemics, supply chain volatility, raw material shortages, and overseas regulations and policies. These risks necessitate a need for Australia to balance advantageous participation in the global tech market with ensuring adequate sovereign capabilities to mitigate these risks.

Why is this important? Rewind to last week, when we were privileged to be addressed in this place by the Prime Minister of Canada, the Rt Hon. Mark Carney, who, at the World Economic Forum in Davos this year, uttered words that would resonate deeply. He said:

… when we only negotiate bilaterally with a hegemon, we negotiate from weakness. We accept what's offered. We compete with each other to be the most accommodating.

This is not sovereignty. It's the performance of sovereignty while accepting subordination.

When speaking about what it means for middle powers to 'live the truth', he said:

… it means reducing the leverage that enables coercion—that's building a strong domestic economy. It should be every government's immediate priority.

And diversification internationally is not just economic prudence, it's a material foundation for honest foreign policy, because countries earn the right to principled stands by reducing their vulnerability to retaliation.

We are now seeing governments around the world, especially middle powers, move fast on treating procurement as an issue of sovereignty and diversifying things such as digital investments.

Just over a month ago, the French government announced that 2.5 million civil servants will transition away from videoconferencing tools such as Zoom and Microsoft Teams and move to a homegrown system. The French government was explicit about its reasoning: to guarantee the security and confidentiality of public electronic communications, and to rely on a powerful sovereign tool. French ministers have spoken openly about the risks of sensitive data and strategic innovation being exposed to foreign actors.

Other European jurisdictions have migrated public servant inboxes from Microsoft to open-source alternatives, have shifted file sharing from SharePoint to Nextcloud and are exploring replacing Windows with Linux. At the European level, the push for digital sovereignty has become a formal policy agenda. The European Commission's leadership has warned that reliance on single countries or companies in critical digital infrastructure can be weaponised. The EU has paired strong regulatory frameworks with strategic investment and procurement levers designed to foster domestic capability.

We don't have that kind of thought leadership occurring on national soil right now, and we should. Australia isn't insulated from these pressures. Our public sector relies extensively on global cloud and software providers. We've introduced important safeguards, including reforms to critical infrastructure, security and competition law, yet the aforementioned inquiry found:

… there is a significant procurement capability gap in the APS, which is characterised by risk-aversion, inter-agency fragmentation and non-compliance.

Procurement is often obsessively framed, in this place, in terms of 'achieving value for money', 'ensuring probity' and 'avoiding waste'. All of that's essential, but you cannot be blinkered around those concepts. Value for money is not confined simply to the lowest upfront price. It can and should incorporate long-term strategic value.

The European Union recognised this explicitly through its Cloud Sovereignty Framework, introduced late last year, where procurement decisions are weighted to consider strategic sovereignty, legal and jurisdictional sovereignty, data and AI sovereignty, technological sovereignty and more.

Australia does this in some sectors; that's the good news. For example, defence procurement is explicitly linked to sovereign industrial capability priorities. We recognise that certain capabilities must be sustained domestically for reasons of national security and strategic autonomy. The question is: why would digital capability more broadly be treated any differently?

Digital systems underpin our energy grids, our health records, our financial transactions, our education systems and our defence platforms. They're as critical to national resilience as traditional industrial assets. If we default to the largest global incumbents in every single category, Australian firms are denied the anchor customer they often need to grow. Venture capital will then flow offshore. Intellectual property will migrate. Our brightest engineers, for example, will build foreign platforms rather than nurture domestic ecosystems. Conversely, when government deliberately creates space for local providers—through clearer pathways into procurement panels, proportionate contract requirements and genuine consideration of sovereign capability—that catalyses growth.

Technology markets tend towards concentration, which has been seen time and again. Network effects and scale advantages reinforce incumbency. Without deliberate counterweights, smaller domestic firms struggle to compete for large public contracts, regardless of their innovation or quality. Procurement is one of the few levers governments possess to rebalance those dynamics. The government has rightly spoken about, and acted on, building a Future Made in Australia. We've invested in clean energy, advanced manufacturing, critical minerals processing and value-adding industries. But technology has to sit at the centre of that ambition.

Australia's research base is world class. Our research institutions consistently rank among the best globally and produce a disproportionately high share of global research. We produce exceptional research in quantum computing, in medical technology, in cybersecurity, in fintech and in artificial intelligence. Yet, too often, we invent here and commercialise elsewhere. I'm tired of seeing an idea that began in an Australian mind being completed in a company in another country. The issue is not that we're short on ideas or talent. It's the structural and cultural barriers that stop us from scaling innovation. It's got to be called out. There is a complete lack of support and faith in the corridors of Treasury and Finance, whose mindset is stuck in the nineties. They believe the best thing Australia can be is the customer of someone else's idea or product.

Look no further than Vaxxas as an example. Vaxxas is a Brisbane based Australian company that's commercialising novel tech to enhance the performance of existing next-generation vaccines. At the University of Queensland, Vaxxas developed a high-density microarray patch, which is effectively a needle-free vaccine patch the size of a 20c coin, pioneering future self-administered vaccine delivery. Not only can this biotech development achieve stronger immune protection with smaller doses, it can also eliminate the need for vaccine refrigeration during storage and transportation—all developed in this country. The implications for reducing the resource and logistics burden of maintaining this strict vaccine cold chain can't be understated, nor can the possibility of mailing these patches out for self-administration in the event of another global pandemic, rapidly reducing disease spread. Here's what Vaxxas CEO David Peacock had to say:

We have funding from the US and Europe for pandemic preparedness, but we do not have any funding from the federal government here.

Vaxxas doesn't want to see their homegrown invention head offshore. They've told us that their tech could be integral to our sovereign capability for pandemic preparedness. Yet there's a strong likelihood they'll have to move their headquarters overseas, because they've been backed by Europe faster than they've been backed by their own country. Our ecosystem has let them down.

There is a choice before us. We can accept that Australian-built know-how will be governed elsewhere, with economic benefits flowing out of this country. Alternatively, we can treat procurement as a tool—one that deliberately nurtures domestic capability, de-risks world-class Aussie innovation, supports scaling Australian firms and embeds resilience into national tech and digital infrastructure—not as a cost but as a genuine investment to stimulate demand for new tech to support growth. I'm proud of the progress that has been made; for example, the changes to the Commonwealth Procurement Rules that came into effect at the end of last year. Those things matter.

For the first time, we've got a clear definition of what counts as an Australian business for procurement purposes. This is huge. This gives transparency to the system and confidence to Australian firms that when we say we're backing Australian business, we mean it. Too often in the past, procurement processes have favoured those with the resources to navigate complex tenders rather than those with the best ideas or the most innovative solutions. In October last year, the updated Commonwealth Procurement Rules gave that definition practical effect. From 17 November 2025, non-corporate Commonwealth entities have to prioritise Australian businesses for procurement below the relevant procurement thresholds. This update, amongst others, will provide Australian businesses with access to approximately 31,000 Australian government contracts valued at almost $2 billion. Changes that sit within the broader Future Made in Australia framework, taken together, will show a procurement framework that's way more structured, more transparent and strategically stronger than it was years before.

We also have to acknowledge that technology markets are evolving at extraordinary speed. Artificial intelligence is a classic example of what's happening there. The platforms and standards being locked in today will shape productivity, security and economic growth for decades. But we can't afford to treat that as business as usual. We also need to make sure that, when it comes to procurement, Australian firms are not disadvantaged when competing against firms that have aggressive tax-minimisation strategies. If there are firms that refuse or minimise the amount of Australian tax they pay, those firms should not be entitled to reap the Australian revenue that flows to them through procurement, and we should take a much stronger stand on that.

We do need to create space in procurement for alternative providers, particularly Australian firms, creating opportunities for local tech. We anchor capability. We give our researchers and engineers commercialisation pathways in this nation. It doesn't mean excluding international firms. We're an open trading nation, but we want to benefit from global innovation and investment fairly and in a way that does not lock us in to being completely dependent on global supply chains that can reduce our independence as a result.

We should be asking: Are our procurement frameworks adequately weighting considerations of digital and tech sovereignty? Are we lowering barriers for innovative Australian SMEs to compete for government contracts? Are we systematically assessing the long-term strategic implications of vendor concentration in critical digital services? When we appropriate billions of dollars in procurement, we're not simply paying invoices. We're shaping markets. We're signalling priorities. We're determining which firms will grow, which technologies will dominate and where the next generation of innovators will build their careers.

The Finance Portfolio Additional Estimates Statements 2025-26 state that Finance 'will advance regulatory reforms and the procurement integrity agenda and focus on enhancing our data and digital capabilities internally.' There's also been a focus on the application of artificial intelligence as we strengthen and implement AI for the Australian Public Service. I look forward to these developments, but, more importantly, I look forward to Australian procurement backing Australian business.

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