Finance Minister Katy Gallagher has announced changes to set thresholds that prioritise Australian businesses for government work. Photo: Michelle Kroll.
Australian businesses are being prioritised through procurement changes and Federal Government purchasing.
Next month, new rules kick in to require government agencies to invite only Australian businesses to tender for contracts valued below $125,000.
The threshold is far higher for construction services – set for contracts valued below $7.5 million.
The new rules start from 17 November 2025.
Making the announcement this week, Finance Minister and Minister for the Public Service Katy Gallagher said the changes demonstrated the government’s commitment to supporting Australian businesses while still meeting its international trade obligations.
“This is about making sure more of the Commonwealth’s purchasing power flows directly to Australian businesses, creating local jobs and supporting our economy,” Senator Gallagher said.
“For the first time in more than two decades, we’re raising the tender threshold and prioritising Australian suppliers.
“That means small and medium enterprises will have better access to government contracts worth billions of dollars each year.”
The increase in the non-construction threshold for open tendering, from $80,000 to $125,000, marks its first rise in more than 20 years.
Businesses will need to declare themselves as an Australian business to be considered for prioritised contracts. The definition of an Australian business was released earlier this year following a public consultation process.
The definition, incorporated into the Commonwealth Procurement Rules, means a business and any parent business must meet specific criteria to be considered an Australian business.
That criteria includes having 50 per cent or more Australian ownership, or being principally traded on an Australian equities market.
The definition also insists an Australian business, as far as government procurement contracts go, must have Australian tax residency and its principal place of business in Australia.
The Federal Government is also improving AusTender, the central procurement information system.
Starting in October 2025, the Supplier Portal will be introduced to give suppliers control over their own information and display their key characteristics.
Suppliers will be able to detail their business’s capabilities and identify whether they are an Australian business, First Nations business, and/or a small or medium enterprise.
Detailed advice to help guide businesses in applying the definitions is available through the AusTender site and Supplier Portal.
Starting with the 645 suppliers on the Management Advisory Panel and People Panels, the Supplier Portal will be available for all suppliers to join from July 2026.
The Supplier Portal also establishes a publicly searchable, voluntary register for women-owned businesses tendering for government work.
When a business registers on the Supplier Portal it will be able to identify whether it is a women-owned business. From 2026-27, the government will report on the number of contracts being awarded to women-owned businesses.
“The new Supplier Portal will also make it easier for businesses to put themselves forward, giving them more visibility and more opportunities,” Senator Gallagher said.
“It’s a practical reform that will help level the playing field, including for First Nations businesses, SMEs and women-owned businesses.
“This is a big change in the way government does business. It’s about backing Australian capability and making sure taxpayer dollars support Australian jobs.”
Senator Gallagher said Commonwealth Government procurement was a major economic lever and Australian businesses would now be “front of the queue” for about 31,000 Australian government contracts, valued at almost $2 billion – based on 2024‑25 data.
Rachel Gately, from Trellis Data, has been championing home-grown solutions. Photo: Trellis Data.
Rachel Gately, co-founder of Canberra-based AI company Trellis Data, welcomed the changes.
“We’ve long championed home-grown solutions over defaulting to overseas alternatives,” she said.
“At Trellis Data, our goal has always been to give the Australian Government a trusted local option for leading AI technology.
“Trellis Data is already creating efficiencies for government departments, and with these changes we’re hoping to help unlock even more benefits with Australian-made AI.
“We look forward to seeing these rules put into action and to a future where the government is able to more easily and consistently engage with home-grown partners, like Trellis Data.”
Master Builders Australia chief executive officer Denita Wawn said the rule changes, particularly those requiring only Australian businesses be invited to tender for government construction contracts valued below $7.5 million, were good news for small- to medium-sized business which made up 98 per cent of the nation’s building industry.
“The challenges of carrying out government-funded work are longstanding and well known across the building and construction industry,” she said.
“Every $1 million worth of building activity supports around $3 million across the economy and with the scale of infrastructure investment in the pipeline growing, now is the time for government procurement practices to maximise the positive economic impact government construction work can have in local economies and communities around the country.”
