Much has been said about the federal government’s Indigenous Procurement Policy (IPP). Launched in 2015, supporters have hailed the scheme as one of the ‘proudest achievements’ in Indigenous affairs. However, I have criticised the policy, arguing it is interventionist and can undermine the benefits of the free market.
The overall impact of the IPP will take years to become clear. However, some lessons are being learned at a state and territory level, where governments are introducing their own procurement strategies.
The New South Wales government recently released its own Aboriginal Procurement Policy (APP). The Minister for Finance and heads of NSW Procurement consulted with the CIS on the development of this strategy — and it appears some of our recommendations have been implemented.
Significantly, the APPs the certification of a business’s Indigeneity will be far more wide-ranging than its federal counterpart. Under the IPP, Supply Nation was appointed the sole certifier of Indigenous businesses. Contrastingly, the APP will see this process open to a larger list of organisations — as long as a set of minimum standards are adhered to.
The benefits of this are clear to see. With multiple certifiers available in the market, Aboriginal businesses will have the power to choose who they pay their membership fees to. This will create an environment for competition between certifiers, who will have to continually improve their product in order to attract more members.
For business owners, this means certification becomes about far more than a confirmation of Indigeneity. Organisations such as Supply Nation and the NSW Indigenous Chamber of Commerce will be incentivised to offer more benefits — such as business skills training and networking opportunities — to win over suppliers.
This is a boost to Indigenous businesses, many of which were frustrated when Supply Nation effectively became a monopoly after it was chosen as the ‘winner’ for the federal IPP — rendering the businesses’ memberships of other organisations virtually void.
Indigenous suppliers face numerous challenges, such as poor financial literacy and limited business connections. However, fostering competition amongst businesses support organisations will undoubtedly help overcome these.
Home > Commentary > Opinion > Competition breeds benefits for Indigenous business
Competition breeds benefits for Indigenous business
The overall impact of the IPP will take years to become clear. However, some lessons are being learned at a state and territory level, where governments are introducing their own procurement strategies.
The New South Wales government recently released its own Aboriginal Procurement Policy (APP). The Minister for Finance and heads of NSW Procurement consulted with the CIS on the development of this strategy — and it appears some of our recommendations have been implemented.
Significantly, the APPs the certification of a business’s Indigeneity will be far more wide-ranging than its federal counterpart. Under the IPP, Supply Nation was appointed the sole certifier of Indigenous businesses. Contrastingly, the APP will see this process open to a larger list of organisations — as long as a set of minimum standards are adhered to.
The benefits of this are clear to see. With multiple certifiers available in the market, Aboriginal businesses will have the power to choose who they pay their membership fees to. This will create an environment for competition between certifiers, who will have to continually improve their product in order to attract more members.
For business owners, this means certification becomes about far more than a confirmation of Indigeneity. Organisations such as Supply Nation and the NSW Indigenous Chamber of Commerce will be incentivised to offer more benefits — such as business skills training and networking opportunities — to win over suppliers.
This is a boost to Indigenous businesses, many of which were frustrated when Supply Nation effectively became a monopoly after it was chosen as the ‘winner’ for the federal IPP — rendering the businesses’ memberships of other organisations virtually void.
Indigenous suppliers face numerous challenges, such as poor financial literacy and limited business connections. However, fostering competition amongst businesses support organisations will undoubtedly help overcome these.
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