Companies bidding on government contracts will soon have to meet gender targets. Will we finally see real progress?

The Australian government wants to ensure that its contracts are price almost 75 billion Australian dollars per yr – not only provide value for money for taxpayers, but in addition promote gender equality.

Under proposed changes to the purchasing policy announced earlier this month that enormous firms wanting to bid for government contracts will first have to meet certain conditions regarding gender equality.

How exactly will these measures work across Australia’s vast private sector and what impact could they have?

This isn’t a brand new idea

Federal procurement processes – the best way we try to award government contracts to the most effective possible suppliers – currently follow a particular set of Commonwealth Procurement Rules.

They must provide value for money, encourage competition and make sure that public funds are utilized in an “efficient, effective, economic and ethical” way.

Using tenders as a lever to achieve gender equality isn’t a brand new idea. It is really useful all around the world, including: OECD, Asian Development Bankand World Bank Group.

The idea is for the government to use itspurchasing power” to encourage – and ultimately pressure – firms to take bolder steps towards achieving gender equality.

This is a way to ensure direct government efforts promote gender equality should not questioned or otherwise removed in how taxpayer money is spent.

Existing requirements for Australian businesses

In Australia, firms with 100 or more employees are already required to report to the Workplace Gender Equality Agency (WGEA) on six gender equality indicators. These indicators include:

• composition of the workforce
• board composition
• gender pay gap
• availability of flexible work organization
• worker consultation processes
• sexual harassment policies.

Bidding on certain government contracts also requires firms to prove they’re following WGEA reporting processes. Binds certificate download from the agency’s website.

Under suggested changeslarge firms with greater than 500 employees will have to transcend simply reporting their figures. If they need to proceed to compete for government contracts, they will need to set and achieve measurable goals for his or her organization on at the very least three indicators.

As explained by Senator Katy Gallagher, Minister of Finance, Women and the Public Service announcing the measures taken: :

At Government, we imagine that shining a lightweight on what is definitely happening in workplaces will put pressure on employers to rethink the best way they hire, promote and reward their people.

Implementation concerns

There are concerns concerning the practicality, market effects and reach of such a large-scale public procurement policy. However, we have reason to be optimistic, since the project proposed by Australia goes a way to dispel these fears.

1. Companies may not know the way to perform this evaluation

Some might say that there’s a risk that these latest requirements will be unduly burdensome for firms that don’t already perform any such evaluation. Such firms may lack the resources and technical knowledge to take additional steps.

It’s a legitimate concern. OECD research shows that a scarcity of clarity on “what to do” is a serious challenge in gender equality procurement practices all over the world.

However, a key advantage of Australia’s proposal is that it leverages existing data collection processes that firms have already invested in, without adding burdensome additional requirements.

There is evidence of the effectiveness of this approach on the state level. As a part of the 2022 pilot, the Western Australian Government has introduced a brand new requirement for bidders bidding on its contracts to show they’re complying with existing WGEA reporting procedures. Some rating a part of this system concluded that the brand new criteria have made a big contribution to raising business awareness and understanding of gender equality.

To further reduce this risk, the Australian Government could put money into providing information guidance to businesses on what will be required of them. Victoria’s Commission for Gender Equality within the Public Sector has already done this state government tenders.

2. Less competition in tenders?

If the extra layer of necessities eliminates potential competitors from the business community, there may be a risk that it could reduce competition for government contracts.

Economists have good reason to worry that weaker competition could raise the costs of services offered, leading to a lack of value for taxpayers.

But Victoria social procurement framework helps us cope with this problem by getting us to consider how “value for money” can mean greater than just getting the bottom price.

A broader definition of “values” would come with progress toward social goals that provide significant advantages to the community – comparable to women’s equality.

Gender equality practices themselves are an often ignored source of additional value through the broader ideas, innovations and skill sets that diversity brings. These measures mean a brand new group of firms can join the competitive set.

3. Limited range

For firms that do not have to apply for government contracts, there’s a superb likelihood these latest measures won’t make much of a difference. However, the government has other ways to put pressure on them.

WGEA already has the proper to publicly “name and shame” firms that don’t meet legal requirements for transmitting gender equality data.

Following a public highlight on firms with the biggest gender pay gaps, the “non-compliance” list includes firms that do not report their data in any respect.

There are several well-known names on the pages latest list: General Motors, Manly Warringah Sea Eagles Club, Sofitel Sydney Wentworth and a number of other McDonald’s stores in Melbourne.

It’s not clear how much mentioned on this list – or being deemed ineligible for government contracts – matters to these firms or their clients and customers.

It is these firms – those which can be uncontrolled and beyond the scope of government contracts – that we will proceed to need to focus on.

Public procurement is only one lever in a multi-pronged strategy to achieve gender equality. Grades suggest that some public procurement strategies are unlikely to increase women’s bidding effectiveness unless: other deeper barriers that limit women’s involvement were also dismantled. However, Australia’s investment in data collection to date means it may well still be a robust tool.