Labour Targets 15% Government Contracts for Small Businesses

Labour's proposal to set a target of 15% of government contracts going to small businesses is not a new idea, but rather an acknowledgment that the current system has made it difficult for smaller firms to participate. The $50 billion market of government procurement has been largely inaccessible to small businesses due to complex rules and compliance costs.

The National party had already introduced reforms in 2025, reducing the number of procurement rules from 71 to 47 and introducing an economic benefit test that requires at least 10% of every procurement decision to be weighted on how much a proposal benefits the New Zealand economy. However, Labour's move goes further by setting a numerical floor for small business participation.

The party has also promised to break up large contracts where practical, dismantling the structural barrier that prevents smaller competitors from bidding. Additionally, Labour plans to stop agencies requesting information they already hold, reducing waste on both sides of the transaction.