The number of contracts awarded to Indigenous businesses and corporations under the Indigenous Procurement Policy (IPP) has more than doubled since 2015, accompanied by a 21 percent increase in spend over the same period, according to new research.
The Indigenous Business and Corporation Snapshot 4.0 reveals Indigenous businesses won an average of 8,197 contracts per year between 2015/16 and 2018/19 – an increase from 3,589 a year between 2007/08 and 2014/15 – with an estimated 82 percent of recipients receiving their first Commonwealth contract under the IPP.
Produced by the Dilin Duwa Centre for Indigenous Business Leadership, in partnership with the Australian Bureau of Statistics and with the participation of numerous Indigenous business data custodians, such as the University of Melbourne, the research highlights the impact of the IPP while touching on key areas for improvement.
According to the report, the IPP is meeting its indicators of success, which include opening up new opportunities for Indigenous businesses and corporations, and increasing the value and contracts awarded to the ecosystem.
However, while more contracts are being awarded under the IPP than ever before, Snapshot 4.0 shows they’re not necessarily being evenly divided across the sector, which means the potential increases the IPP could bring to Indigenous employment are “yet to be realised”.
Report Lead Author, Associate Professor Cain Polidano, said 60 percent of working-age Aboriginal and Torres Strait Islanders live in rural and remote areas, but employment rates there are lower than in the city.
“If we’re going to increase economic empowerment, this is where our efforts need to be focussed,” he said. “Our data shows we can’t rely on the IPP alone to close the employment gap.”
The Snapshot reveals Indigenous businesses and corporations are generally competitive in open tenders, but are not heavily dependent on the IPP – excluding the top five percent of most successful businesses which are highly dependent on the IPP.
Around four percent of total revenue comes from IPP contracts, with most growth in contract value (60 percent) arising from Commonwealth procurement outside the IPP, although the report notes the IPP may have indirectly helped firms gain experience and connections that led to this success.
“Despite the success of the IPP and Indigenous businesses and corporation procurement in general, the IPP alone is not likely to lead to meaningful progress towards closing the gap in Aboriginal and Torres Strait Islander employment,” said the report.
“Ultimately, the primary objective of government procurement is to procure goods and services for government service delivery. Programs like the IPP that increase the proportion of government spend with Indigenous businesses will mainly benefit parts of the Indigenous business sector that can contribute to government service delivery, especially in administrative services, professional, scientific and technical services and construction.
“These services typically benefit businesses and corporations within metropolitan areas, where Aboriginal and Torres Strait Islander employment is relatively high compared to other regions.”
The Snapshot points to black cladding and the verification of Indigenous ownership as critical concerns, highlighted by the fact that 29 percent of IPP spend is with businesses that are not registered with Supply Nation or are not ORIC corporations.
For better transparency, it suggests entities should be required to provide details of their verification process if they are not using Supply Nation or ORIC registries, which would necessitate a change to the recording process in IPPRS.
The Indigenous business and corporation ecosystem is a major employer of Aboriginal and Torres Strait Islander
people nationally. In 2021-22, it was estimated to employ 135,733 employees, 46,718 of whom are Aboriginal and Torres Strait Islanders.
This represents around 13 percent of the working-age (25-64) Aboriginal and Torres Strait Islander
population, or 20 percent of the employed Aboriginal and Torres Strait Islander population.
The fourth iteration of the Indigenous Business Snapshot quantifies the total of Commonwealth procurement with Indigenous businesses and corporations, including contracts awarded through the IPP. It builds on data collated in the previous instalments, with the aim of further enriching Indigenous business data with each study.
