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The business benefits of the Indigenous Procurement Policy (IPP)

The business benefits of the Indigenous Procurement Policy (IPP)

Anthony Pike, Stacey Quinn

The Indigenous Procurement Policy (IPP) was initiated on 1 July 2015. The key focus of this Federal Government policy is to boost Indigenous entrepreneurship and support business development. This is achieved through creating more opportunities for Indigenous Australians to participate in the economy. Note also that State governments have adopted similar policies.
 
Prior to the implementation of the IPP, Indigenous businesses had far less opportunity to secure business from Commonwealth procurement. This policy aims to increase the rate of purchasing from Indigenous enterprises. This assists in driving Indigenous economic development and helps strengthen the Indigenous business sector.
 
The IPP aims to increase the Australian Government’s Indigenous procurement in three ways.
 
Annual targets for the volume and value of contracts to be awarded to Indigenous businesses by the Commonwealth government.  
The success of the IPP is determined by:
  • A rise in the number of Indigenous businesses awarded a contract.
  • A rise in the volume and value of contracts awarded to Indigenous businesses. 
Since the implementation of this policy in 2015, the IPP has performed extremely well against these KPIs. $3.5 billion has been produced in contracting opportunities for Indigenous businesses. This has involved over 24,470 contracts awarded to more than 2,140 Indigenous businesses.
 
An increasing number of Indigenous businesses are winning higher value contracts through the Government’s Indigenous Procurement Policy and participating an ever-increasing amount to government supply chains. In 2020-21, the value target increases to 1.25 per cent, working towards 3 per cent of all Commonwealth contracts being awarded to Indigenous businesses by 2028.
 
What does the IPP mean for non-Indigenous businesses?
 
For non-Indigenous business, the Indigenous Procurement Policy presents itself as an exciting opportunity. Engaging/coordinating with Indigenous businesses can benefit non-Indigenous organisations, as they are able to benefit from government projects, particularly in sectors such as construction, mining, food and tourism.
 
A prime example of a successful collaboration between Indigenous business and non-Indigenous businesses is Gilimbaa, a creative agency that has been in operation for over 10 years. In recent times, Gilimbaa has created artwork motifs for the Commonwealth Games that stretched across many facets, including the athletes’ uniforms. The agency has also developed artwork and designs for Australia Post, Qantas, Kmart Australia and Lendlease; and educational animations for state, territory and federal governments.
 
Benefits associated with growing the Indigenous business sector.
 
Building Indigenous businesses also builds skills and empowers communities and provides positive role models in communities. Strengthening skills in communities also contributes to improving networks and financial wellbeing, which in turn encourages the uptake of education. An Aboriginal business is 100 times more likely to employ Aboriginal people.
 
The growth of the Indigenous business sector not only aids business owners but also provides wider public benefit. This is achieved through increasing income levels and accelerating wealth generation in communities. These factors help move this historically dispossessed population off the welfare system and potentially improve the gap that currently exists in health and life expectancies.
 
Cultural differences between Indigenous and non-Indigenous persons can sometimes be a cause of frustration for those unfamiliar. In fact, any multi-cultural workplace will face challenges of this nature. However, these differences can positively impact businesses and provide an array of opportunities.
 
When making decisions, Aboriginal people are strong strategists, thinking about the impact of actions several generations ahead - not just at this present time or the next five years. Businesses can learn from this insight into one of the world’s oldest living cultures, in many ways.
Their approach to decision making is holistic, incorporating not just people, but the community and land as well, making it a key driver for sustainable change and growth. A goal which is integrated in most business strategies.
 
More and more organisations are eager to build awareness and improve equality, diversity and inclusion within their workplace. Having a varied workforce provides variety of thought and hence new ideas. Compared to the rest of the world, Australia has some of the most multi-cultural workplaces, providing unprecedented opportunities for growth into new markets. Multi-cultural work environments traditionally are also better at attracting and retaining talent due to the intrinsic value put on a diverse workplace culture.
 
In the case of a business sale, incorporating IPP and having a diverse workforce is something that can positively impact the marketability of your business and make it more attractive to larger buyers. Additionally, many tender processes require IPP and Sustainability Policies (Previously CSR) as part of the eligibility criteria. After all, being able to incorporate another business which already has these important features ingrained in their culture has the potential to make your business a more attractive prospect.
 
The Indigenous business sector is diverse and thriving. Indigenous businesses are participating in all states and territories and are pursuing opportunities in all industries. Building a business sector where Indigenous people participate and interact on equal terms with non-Indigenous Australians helps build understanding and trust that is vital for healing the nation.
Indigenous Procurement PolicyIPPMSA