Indigenous Australian Business Foresees Development Triumph

Australia is a well – developed country with a strong economy, but within it exists a highly struggling native population. Indigenous Australians, after years of mistreatment and discrimination, have been severely struggling economically. The Australian 2016 census showed that Indigenous Australians were experiencing an unemployment rate of 18.4% which was approximately three times the unemployment rate of Non – Indigenous Australians at 5.8%. This is extraordinarily high. When analyzing this statistic within a global context, if the Indigenous Australian employment rate were to be ranked amongst nationalities worldwide from highest to lowest based on recent statistic reports, Indigenous Australia would lie at 18^th, on par with Jordan and in between Armenia (18%) and Nigeria(18.80%). Even Syria, despite the tragedy and wars it has endeared over recent years reported a lower unemployment rate at 15.10%. (Trading Economics, 2018) Other countries below Indigenous Australia would also include Iraq and Haiti. It may be hard to collect current and accurate data from these regions, but this is still cause for great concern amongst Australia and its Indigenous population. Furthermore, just over half of Aboriginal and Torres Strait Islanders participate in the workforce with a labor participation rate of 57.1% versus the non – Indigenous labor participation, which stands at over three – quarters of the population, at 77%. (Statistics, 2018)

            Over the past three years the Australian government has decided to take action, implementing four different policies aimed at promoting and growing the Indigenous Business Sector by creating job opportunities, stimulating economic growth and supporting Indigenous communities. These development policies are as follows:

1. In July 2015 the Australian government enacted the Indigenous Procurement Policy (IPP). The purpose of the IPP was, “to leverage the Commonwealth’s annual multi-billion procurement spend to drive demand for Indigenous goods and services, stimulate Indigenous economic development and grow the Indigenous business sector” (Government, INDIGENOUS PROCUREMENT POLICY, 2018). The policy was released in three main parts including:

·         “A 3% target of all government contracts that needed to be awarded to Indigenous businesses by 2020;

·         A mandatory set-aside for remote contracts and contracts valued between $80,000 - $200,000;

·         Minimum Indigenous participation requirements in contracts valued at or above $7.5m in certain industries.” (Government, INDIGENOUS PROCUREMENT POLICY, 2018)

2. The Indigenous Entrepreneurs Package (IEP) was announced in 2016 as part of the 2016 election commitment. The IEP will experience one of its first actions implemented in 2018 with the set opening of the Barayamal Centre for Entrepreneurship (BEC), which will commence operations in July 2018 (it will be the first centre for Indigenous Entrepreneurs in Australia). The aim of the Indigenous Entrepreneurs Package was to build upon the success of the IPP by introducing $115million Fund aimed at, “empowering Indigenous Australians – through job creation, financial security for families and communities, and contributing to the growth of local economies and the Australian economy broadly.” The package is divided into three components as follows:

• “a commitment to develop the first Indigenous Business Sector Strategy to provide Indigenous businesses with the support, finances and networks they need for their businesses to thrive;

• a commitment to refocus Indigenous Business Australia’s business support program on early stage entrepreneurs across Australia; and

• a $90 million Indigenous Entrepreneurs Fund.” (Government, GROWING THE INDIGENOUS BUSINESS SECTOR, 2018)

3. Towards the end of 2016 the Australian government introduced the Indigenous Grants Policy (IGP) which has a twofold purpose:

·         “Increase the involvement of Indigenous people in the design and delivery of programs that affect them; and

·         Improve on‑the‑ground service delivery for Indigenous Australians.” (Governemnt, 2018)

The IGP is attempting to reform the method in which grant money is provided to Indigenous Australians such as to highly improve the efficiency and effectiveness of the process, thus improving outcomes for Aboriginals and Torres Strait Islander communities and businesses. The IGP would be applied to mainly Grants to a Third Party in which Indigenous Australians are the main beneficiaries. One example, of this may be a grant given to a remote micro-finance institution whose majority clients are Indigenous Australians, thus providing more resources and support for their businesses and communities.

4. On the 12^th of February 2018 the government announced the establishment of the Indigenous Business Sector Strategy (IBSS). According to the Department of the Prime Minister and the Cabinet, “It is the first time ever the Commonwealth is investing in a comprehensive package of support for Aboriginal and Torres Strait Islander people to take their rightful place in the Australian economy.” This strategy builds upon the 2016 Indigenous Entrepreneurs Package and will specifically include:

·         “The establishment of Indigenous Business Hubs anchored to major cities – a one-stop-shop for business advice and support – starting in Western Sydney in partnership with the New South Wales Aboriginal Land Council.

·         A $27 million Indigenous Entrepreneurs Capital Scheme to unlock a range of finance and capital products for Indigenous businesses who are transitioning to mainstream banking.

·         Doubling the microfinance footprint across Australia to support more entrepreneurial activity and economic development especially among young people and women, and in regional and remote locations.  

·         Specific support for Indigenous businesses that wish to take advantage of our record investment in major infrastructure projects.” (Government, A new roadmap for growth of the Indigenous business sector, 2018)

The Indigenous Business Strategy will also specifically aim at increasing the number of Aboriginal and Torres Strait Islander women and youth into the business sector.

Evaluation:

Unfortunately, due to the recent introduction of these policies the only one that can be fully examined is the IPP, the other three policies have not had effective time after implementation to be fully analyzed. Therefore, the following discussion involves the evaluation of the IPP, as the IEP will only see its first centre open next month, while the IGP has been in operation for little over a year and the IBSS for approximately five months.

The IPP has brought great success resulting in major growth amongst Indigenous Businesses. Some of the outcomes are list below:

·        “In the first two years since the IPP began, from 1 July 2015 to 30 June 2017, 4,880 contracts were awarded to 956 Indigenous-owned businesses with a total value of $594 million.

·        This cumulative figure includes $24 million in contracts awarded to Indigenous businesses in 2015–16 that was not reported until 2017;

·        Contracts were awarded across all industry sectors and in all states and territories.” (Government, INDIGENOUS PROCUREMENT POLICY, 2018)

According to the minister of Indigenous Affairs Senator Nigel Scullion that, “Within the first two years of the IPP, we have already exceeded the 2020 target of awarding 3 per cent of all government contracts to Indigenous businesses annually – targets which were once thought impossible.” He also said that, “Australia’s Indigenous business sector has long been overlooked by governments. Only four years ago Indigenous businesses were awarded just $6.2 million in Australian Government contracts. Today I am pleased to announce that in the two years since this program commenced, 956 Indigenous businesses have won over $594 million in government contracts.” This equates to 9580% increase in contract value for Indigenous Businesses over four years. Thus, the IPP seems to be have been extremely successful in boosting the Australian Indigenous Business Sector, but despite this incredible growth, there are a few concerns from experts. (Government, Coalition's Indigenous Procurement Policy $594 million success story, 2017)

Jo Barraket, director for the Centre for Social impact at Swinburne University said that, “It’s terrific to have governments in Australia, NSW now being one of them, saying they’re going to commit to doing that work,” but, “what we know about procurement is that having the policy isn’t enough. Policy commitments like these require implementation and that often involves changes to systems and culture within government agencies. That’s what is needed; its policy plus implementation.” Despite recognizing and supporting the IPP and its outcomes, director Barraket warns of the future. She says that along with the IPP, continued policy implementation must be maintained, which will hopefully be shown in the other policies. She also stresses the importance of monitoring the policy outcomes and implementation processes such as to ensure the furthered success and growth of the Indigenous business sector. (O'Keeffe, 2018) Finally, another study by the Centre of Independent Studies warns of the issues associated with measuring targets by contract number instead of monetary value. The report states that, “(This) provides an avenue for departments to easily tick off ­targets and creates inconsistency in the measurement of overall figures by enabling figures to be boosted by a large number of small contracts.” Thus, such an element will be a danger in analyzing the estimated effect of the IPP. Despite this, the IPP has shown to be a great success within the Australian economy and the Indigenous Business Sector.

Overall, it might be to early to conclude on the long run effect or success of these development policies, but their implementation is in the aim of a making a difference, and their short run success has proved to be far beyond expectation. The unemployment rate and labor participation rates of Indigenous Australia will also be firmly acted upon and in accordance with effective policies hopefully lead to increases in employment and participation by the next census in 2021. These and future policies will hopefully, as best stated by KPMG expert Bernard Salt, create, “Opportunities for the indigenous community and indeed for all Australians to contribute, to pond, to participate in the creation of a stronger, smarter and more socially cohesive Australian nation.” (CAISLEY, 2018)

References:

CAISLEY, O. (2018, March 27). Aboriginal businesses are growing across the nation. Retrieved from The Australian : https://www.theaustralian.com.au/news/nation/aboriginal-businesses-are-growing-across-the-nation/news-story/ff84615502d4c9568c4202aa138ada2b

Governemnt, A. (2018). OVERVIEW OF THE INDIGENOUS GRANTS POLICY. Retrieved from https://www.pmc.gov.au/indigenous-affairs/economic-development/overview-indigenous-grants-policy

Government, A. (2017, September 29). Coalition's Indigenous Procurement Policy $594 million success story. Retrieved from https://ministers.pmc.gov.au/scullion/2017/coalitions-indigenous-procurement-policy-594-million-success-story

Government, A. (2018). A new roadmap for growth of the Indigenous business sector. Retrieved from https://ministers.pmc.gov.au/scullion/2018/new-roadmap-growth-indigenous-business-sector

Government, A. (2018). GROWING THE INDIGENOUS BUSINESS SECTOR. Retrieved from https://closingthegap.pmc.gov.au/economic-development

Government, A. (2018). INDIGENOUS PROCUREMENT POLICY. Retrieved from https://www.pmc.gov.au/indigenous-affairs/economic-development/indigenous-procurement-policy-ipp

O'Keeffe, D. (2018, May 25). NSW Government boosts Aboriginal procurement. Retrieved from Government News: https://www.governmentnews.com.au/2018/05/nsw-government-boosts-aboriginal-procurement/

Statistics, A. B. (2018). Census of Population and Housing: Characteristics of Aboriginal and Torres Strait Islander Australians, 2016 . Retrieved from http://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/2076.0Main%20Features512016?opendocument&tabname=Summary&prodno=2076.0&issue=2016&num=&view=

Trading Economics. (2018). Unemployment Rate. Retrieved from https://tradingeconomics.com/country-list/unemployment-rate