Speech at the Victorian Traditional Owner Procurement Conference
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Earlier this year, back in May, leaders of the corporate and indigenous community gathered at Darling Harbour for the Supply Nation Gala dinner which recognises indigenous entrepreneurship across the nation.
I wish the night could be attended by all Australians because it shows the extraordinary, but typically unheralded, work that indigenous business people have done in building businesses, creating wealth and employing others. The glamorous black-tie evening is the opposite of the negative images that are so frequently associated with indigenous people.
There are about 9,000 indigenous owned businesses across the nation, covering everything from telephony to construction to catering.
They are, in some regards, an ultimate demonstration of individual self-determination and illustrate what we should all be trying to achieve: a shift from a welfare culture to an enterprise culture.
We cannot force entrepreneurship, but governments can encourage and stimulate it.
Today we are announcing our $1 billion innovation statement which is specifically designed to help businesses start, innovate and grow. It is perhaps the most significant investment in innovation in our nation’s history. The four key areas of focus in the Innovation package are:
- Making it easier to raise capital by creating incentives for the early stages of start-ups making us better at embracing risk
- Encouraging collaboration between business, universities and the research sector to commercialise ideas and solve problems
- Placing a greater focus on training our students for the jobs of the future and attracting the world’s most innovative talent from abroad to Australia.
- The Government leading by example in the way it invests and uses technology.
These initiatives build on the measures that we announced in the most recent budget which were squarely aimed at small business: providing tax relief and allowing instant asset right offs for capital items of up to $20,000 in value.
We want all businesses to grow and thrive because ultimately it is business that grows the wealth and creates the jobs for our nation. Governments cannot do that. Only private enterprise can.
I know there are a lot of people here who are employed by government either directly or indirectly, myself included. Our efforts can only be sustained because of businesses creating wealth and contributing to our tax base.
Business growth matters. In fact, business growth is one of the most important objectives of the Turnbull Government.
The growth of indigenous businesses is doubly important. Like any business, Indigenous-owned businesses create wealth and jobs for the entire society. But in addition, Indigenous owned businesses are vital in our efforts to close the Indigenous employment gap and end passivity.
Out of all the gap indicators, the employment gap is the most important, but also the only one that is going backwards. It is the most important in my view because those with a job are so much more able to take care of other things – looking after your children, owning a house, better health. With a job comes dignity and empowerment.
But the gap is not closing like some of the others. Rather the best data we have shows that the gap is getting larger. This is not because there are fewer Aboriginal people in work, but because the numbers in jobs is not keeping up with population growth. The gap today is 30 percent points.
The government has made indigenous employment its top priority in the Indigenous portfolio, along with school attendance and community safety.
Our efforts are guided by the Forrest Review, which was undertaken by Andrew Forrest and assisted by Marcia Langton. The implementation is well underway and includes a number of pillars.
First, a boost to our public sector indigenous employment. We think it is right that we lead by example. Consequently, in March, we announced a new target of three per cent Aboriginal and Torres Strait Islander representation in the public sector by 2018.
To ensure it happens, Indigenous representation is required to be reported publicly, agency by agency, on the Department of the Prime Minister and Cabinet’s website and in agencies’ annual reports.
Today approximately 309,000 people are employed by the Commonwealth Government. Parity employment in the public sector is 9,270 Indigenous employees under the target.
You can already go to the PM&C website and see which agencies are employing Indigenous Australians and in what proportion.
Second, we are asking the top 200 largest companies to commit to being “parity employers”, by committing to having three per cent of their staff being indigenous. Three per cent, of course, being the proportion of the population that is indigenous. The initiative is based on the concept that if every employer has parity in its businesses, then the gap is by definition closed.
To date, almost 4,500 jobs have been secured under this Employment Parity Initiative. Since we are in this iconic Melbourne venue, I would like to acknowledge Crown Resorts as an initial partner. Through their agreement, they have committed to employing 400 indigenous Australians over the next four years.
Third, we are changing the way that remote people are engaged through a new Community Development Program. This program requires every able adult to participate in work-like activities in exchange for income support payments. Equally importantly, it provides incentives for the provider to link up remote indigenous people into real jobs. In the last 2 years, over 12,000 people have been placed into jobs in this way.
Fourth, we are rolling out Vocational Training and Employment Centres which provide training into guaranteed jobs. Over 3770 indigenous job seekers are already enrolled.
The final initiative to boost employment comes back to my opening remarks about Indigenous businesses.
We are seeking to turbo-boost the indigenous business sector through the use of the government procurement dollar.
Indigenous businesses can be a significant part of addressing the employment gap, because these businesses employ indigenous people at a rate 100 times that of non-indigenous businesses. They are particularly good at employing those who may have been long-term unemployed and have challenges across multiple fronts.
Consequently, the Government has for the first time set a procurement target. By 2020, we aim to give three percent of federal government contracts to indigenous businesses.
No contract will be given to a business unless it can demonstrate value for money, but the target will put pressure on government departments to seek out large and small indigenous owned companies that can provide goods and services for the government.
This in my view will be a huge driver in building our indigenous middle class in Australia.
Currently, the Australian Government spends over $39 billion per annum on various contracts, but last year prior to our procurement policy only about $6 million went to Indigenous businesses. That’s just 0.02 per cent.
Over the two years to June 2014, only 48 contracts over $10,000 were awarded to 18 Supply Nation listed Indigenous businesses.
The idea of indigenous procurement is not new and other countries have used it to great effect.
The United States under President Nixon set itself a target in 1969. Five percent of federal procurement dollars was set aside for small minority businesses by law. As a result, the US Government is today 150 times more successful with procurement from Native American suppliers than we are in Australia with indigenous procurement. The large African American middle class is in part due to this policy which started 45 years ago.
Similarly in Canada, the government set a 4 per cent target back in 1996. Today, contracts valued at $3.4 billion have been awarded to indigenous businesses, supporting thousands of jobs.
We are serious about meeting this goal.
Performance against targets will be published annually on the Department of the Prime Minister and Cabinet website.
Interim targets have been set to make sure work starts immediately.
The Australian Government will need to award 0.5 per cent of its contracts to Indigenous businesses this financial year, with this increasing each year until 2020.
Under the Indigenous Procurement Policy, there is a mandatory set-aside process for contracts valued between $80,000 and $200,000 and for remote area contracts.
Government officers must check the Supply Nation list to see if an Indigenous business can provide goods or services on a value-for-money basis. If they can, they must be awarded the contract.
Government departments will be under more pressure to seek out Indigenous owned companies, so they need to know where to find you.
To make this easier, we’ve worked with Supply Nation to update Indigenous Business Direct.
This is the directory that Australian Government purchasing officers use when they’re looking for Indigenous suppliers.
In addition to the directory, the Australian Government regularly holds events to connect you with officials, so that you can promote what your company can offer.
The officials can also get a better understanding of the range of goods and services that Indigenous businesses can provide.
In the first four months of the Indigenous Procurement Policy’s implementation, the Government has awarded 55 contracts valued at $40 million to 36 Indigenous businesses.
This is already more than five times the Government’s spend on Indigenous contracts in 2012-13.
This is good news, but the even better news is the rapid expansion in Indigenous business capability, through a range of innovative and mutually beneficial joint venture and partnership arrangements with non-Indigenous businesses.
For example, the highest Indigenous Procurement Policy value contract of $9.2 million has been awarded to the Indigenous business, ‘Fields Group’ to provide domestic security services to the Department of Foreign Affairs and Trade.
Fields Group Security will subcontract Wilson Security to assist in the delivery of services.
The value of the Wilsons subcontract from Fields Group will in turn be made available via subcontracts to Fields Group in regional areas where Fields have stronger representation (and an Indigenous workforce) than in Canberra.
This arrangement will allow the Fields Group to draw on Wilson’s knowledge while they develop their own experience and infrastructure.
Fields Group will also engage several other Indigenous providers in the delivery of these services, including Outback Global, the Muru Group, and Our Mob.
After the Fields Group, the construction company SMI was awarded three different contracts valued at $9 million.
These are promising figures and promising new developments in enterprising partnerships.
There is similar good news right here in Victoria as well.
‘Barpa’, the Victorian Indigenous construction and facilities management services business–created through a partnership between the Federation of Victorian Traditional Owners Corporations and Cockram Construction–was recently awarded a $60,000 contract by the Department of Finance.
Barpa means “to build” in the traditional language of the Jaara People of Central Victoria.
I’m pleased to announce today that Barpa has just been awarded their first contract by the Estate Works Program at the Department of Defence.
This $2.2 million contract is a direct result of the Australian Government’s Indigenous Procurement Policy. The project will see Barpa deliver a range of buildings and construction support and maintenance repair services at Puckapunyal.
A government’s role is, in part, to ensure that everyone has an opportunity to achieve, so that key groups are not left behind. As everyone knows, indigenous people have been socially disadvantaged for a long time. Our employment initiatives and particularly our procurement target will assist in ameliorating this.
Of course, we must continue to work with the states and territories on education – the ultimate leveller. Indigenous people with a good education get employed at the same rate as anyone else. But in the short to medium term, supporting Indigenous enterprises that have a proven ability to help the most disadvantaged job seekers, is better than the expense and poison of ongoing welfare.
In the years ahead, let’s hope that there are not 9,000 indigenous businesses, but tens of thousands, taking thousands more off the dole queue and generating wealth.
The beginning of an enterprise culture is already present.
With a bit of encouragement, it could absolutely thrive.