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On 1 July 2015, the Australian Government introduced the Indigenous Procurement Policy (IPP). The primary purpose of the IPP is to leverage the Australian Government’s annual multi-billion procurement spend to drive demand for Indigenous goods and services and stimulate the Indigenous business sector. The IPP has been declared as a “game changer” for Indigenous economic development. Almost five years since its introduction, can this claim be justified?

Key Findings:

  • In 2017-18, all Australian Government departments exceeded their 3.0 per cent IPP target. Specifically, $802.2 million worth of contracts were awarded to 735 Indigenous businesses in 2017-18 across all states and territories and industry sectors. The outcomes associated with the IPP in 2017-18 compare favourably to 2012-13, when only $6.2 million worth of contracts was issued by the Australian Government to the Indigenous business sector.
  • Despite the successes of the IPP to date, it has been subjected to two significant criticisms. Firstly, in order to secure large and long-term contracts from the Australian Government, a common approach adopted by Indigenous businesses is to enter into joint ventures with other organisations.
  • However, some joint ventures have been scrutinised for the practice of ‘black cladding’. That is, large corporations enter into disingenuous partnership with Indigenous businesses and over-represent the involvement and control Indigenous businesses have in order to appear more attractive in tender selection processes.

In response to the successes of the IPP, state and territory governments have increasingly recognised they have an enabling and facilitating role to play in the context of creating the conditions for Indigenous businesses to thrive and to be sustainable. In fact, all states and territories – with the exception of Tasmania - have sought to support Indigenous economic development by either committing to or adopting their own procurement policies and are carrying out considerable and wide-ranging work to support Indigenous employment, education and training.

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