Port Macquarie-Hastings Council has adopted a Local Preference Policy, incorporating a five per cent notional price offset, for a 12-month trial from September 1, 2017.

A notional price offset is effectively a price discount applied to the submitted tender price for local suppliers and has no impact on the final submitted price paid by council. 

The policy statement said the intention of the policy was to support the council’s commitment to achieving the best value for money outcome to council and the community, while maximising opportunities for local business to compete for council business.

Cr Rob Turner said while there were arguments for and against, he supported a 12-month trial.

“I’m very keen to have a look at the data in 12 months’ time,” he said.

Cr Peter Alley said he was passionate about building local businesses and jobs.

He said the issue had been about how the council could best achieve that.

“I think what’s really important is it’s a trial and we need to assess the results of the trial,” he said.

Cr Justin Levido said he was concerned that one day the Australian Competition and Consumer Commission would start suing councils with local preference policies.

Cr Levido said he was open to having the trial, but at the end of the day, real benefit was needed for the community and real benefit was needed for the council.

“I just hope this will provide genuine benefits for us,” he said.

Cr Mike Cusato spoke in opposition of the policy.

“In the world I’m in, there are no preferences,” he said.

“I can’t see any positive in this.”

The decision was carried 7:2 with Cr Cusato and Cr Lisa Intemann voting against.

The definition of a local supplier is contained within the policy.

Local preference policies can operate in a number of ways but generally give advantage to locals over other suppliers.

A report to the August council meeting said for this reason, such policies may be favoured by local suppliers.

Local preference policies carry a number of legal risks depending on their nature.

It was considered that a notional price offset, rather than a weighted local preference/social procurement policy, was more transparent, more able to be consistently applied and less likely to dissuade suppliers from tendering, the council report said.

The policy complements the council’s integrated strategy to support local business.

A further report will be tabled at the end of the trial.