Concerned reactions to NSW 'Buy Australia' policy

The 'Buy Australian' preference included in the NSW budget has drawn concerned reaction from leading trade economists, prominent officials, the United States and the European Union.

The Department of Foreign Affairs and Trade fielded inquiries from both the US embassy and the European Union delegation yesterday, Government sources said, following the 20 per cent cost preference extended to Australian firms. The Chinese embassy has also been made aware of the changes.

The Trade Minister, Simon Crean, has written to the Premier, Nathan Rees, expressing strong concern with a move he sees as contrary to the Government's commitment to fight protectionism.

The state Treasurer, Eric Roozendaal, said the policy was designed to put "NSW jobs first".

"Every year, NSW Government agencies spend billions of dollars buying the things they need to deliver services to the people of NSW. This plan tips the balance in favour of local businesses."

Under the policy, a government agency choosing between buying an Australian-made product for $1000 and a foreign-made product for $900 will prefer the Australian product because it will be considered worth $800.

A trade expert, Ann Capling, from the University of Melbourne, called the move "terrible" but "predictable".

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Leading trade economists yesterday said the NSW government's plan to prefer Australian-made goods amounted to a suicide attack on the nation's biggest source of imports, China.

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