Description

Indigenous enterprise is rapidly becoming big business in Australia. At a whole-of-sector level there are between 12,000 and 16,000 Indigenous-owned businesses, which collectively generate more than $1.0 billion per year, with revenues increasing on average by 12.5% a year. Overall, the implementation of the Indigenous Procurement Policy (IPP) has had a positive effect on Indigenous business, however, while these numbers suggest that Indigenous business is rapidly growing and that the IPP is effective in supporting the growth of these businesses, there is a risk that unintended consequences may arise as a result of perceived externalities (such as black cladding). As such, there is still work to be done to further improve the policy settings and the resultant outcome for Indigenous people and communities. 

Key Findings:

  • The Evaluation identified a number of issues to be addressed in taking the IPP forward including the act of black cladding, the practice of non-Indigenous companies either creating a business structure where the shareholding percentage is technically enough to qualify as an Aboriginal business or attempting to misrepresent themselves as Aboriginal businesses in a bid to win contracts under the IPP and is still perceived to exist in the industry. This can take the form of establishing shadow businesses with Indigenous owners and limited or even no staff to win the work and subcontract the parent organisation to deliver.
  • It is recommended that the definition of Indigenous ownership be amended to require at least 50.0% Indigenous ownership; and at least 50.0% Indigenous control of the company.
  • If the Commonwealth – as a collective – led a series of annual state-based trade shows, it could bring significant benefit to both Indigenous businesses and the Commonwealth such as raising awareness of the Commonwealth and the IPP – exhibiting at industry events is a good way to raise your profiles and generate increased awareness.
  • One of the strongest themes coming through every form of engagement was the need for education and engagement on both sides of the procurement equation. Education needs to be clearly about shifting mindsets. This means moving from a compliance-based model of operating, which has the potential to result in the creation of large amounts of very low-value contracts to ensure attainment of target numbers of contracts, to one of designing a collaborative process. This ensures that all stakeholders have the opportunity to contribute to the design of a system that is efficient and fair in its application.
  • One of the issues often faced by both the Commonwealth and Indigenous businesses is the ability to clearly and concisely demonstrate capability. This is augmented by the use of outcome-based targets in many procurement opportunities that may give rise to ambiguity. This results in Indigenous businesses bidding for work that they are unable to demonstrate either the capacity or capability to deliver. This in turn has the potential to create (or confirm) an unconscious bias that Indigenous businesses do not have the capability or capacity to deliver to the Commonwealth’s expectation.

 

Publication Details
Publication Year:
2019