The Commonwealth Government’s $1 billion Jobs Plan announced today (see media release) appears to be based on an assumption that Australian businesses aren’t getting a fair share of work out of major projects. I find this odd considering the massive amount of money the resources sector spends on goods and services across Queensland, for example, as documented in the Queensland Resources Council (QRC) publication Economic Impact of the Resources Sector on the Queensland Economy. (While I have previously criticised the economic multiplier figures presented by the QRC, I don’t dispute the direct spending estimates.) The publication notes:

Expenditure data provided by QRC full-member companies indicated that the resources sector contributed an estimated $36.0 billion in direct spending to the Queensland economy in 2011/12, comprised of….

…$27.9 billion in voluntary community contributions and purchases of goods and services from local businesses
(including contractors).

Australian businesses seem reasonably savvy in seizing opportunities to work in the resources sector and hence I don’t think the Government’s proposed new Australian Industry Participation Arrangements for big projects ($500M+) are justifiable.

Even if Australian businesses aren’t getting their fair share of work, which I doubt, it is dubious economic policy to prod companies into locally purchasing goods and services that could be purchased more cheaply from overseas. That would run counter to enhancing productivity and realising the benefits of free trade.