The Western Australian State Government has this month renewed their Aboriginal Procurement Policy (APP) but the chair of the Noongar Chamber of Commerce and Industry (NCCI) said the targets aren’t ambitious enough.
NCCI Chair and proud Noongar man Gordon Cole says the current rate of change is incremental and needs to move faster.
“The Aboriginal Procurement Policy can really make an impact if it was accelerated,” Cole told NIT.
“We need more of a paradigm shift to really accelerate Aboriginal business.
“Is it going to take another 50 years or do we get on with it and really start to put concrete policies in place?”
The renewed target will increase by 0.5 per cent per year in 2023-24, requiring departments to award four percent of their total number of contracts to Aboriginal-owned businesses.
Fortescue Metals Group’s Billion Opportunities Program has been widely praised as a trail-blazing program in Aboriginal procurement.
“FMG have led the country, they were doing a lot of this stuff before the procurement policies came into place, they were just getting on with it,” Cole said.
Billion Opportunities’ target is by value, rather than number of contracts, and has proved very effective in building the capacity of the Aboriginal business sector.
In 2011, with just two Aboriginal businesses in their supply chain and only $20 million in contracts awarded, the mining company set a value target of awarding $1 billion to Aboriginal businesses in two years.
At the beginning of this year, on the 10-year anniversary of the program, Fortescue celebrated reaching a milestone of more than $3 billion in contracts awarded to Aboriginal-owned businesses since the program’s inception.
It’s an approach replicated by the Federal Government’s Indigenous Procurement Policy.
The success of the Commonwealth’s IPP is measured by an increase in both the number of Indigenous businesses awarded a contract, and an increase in the volume and value of contracts awarded to Indigenous businesses.
Cole said when the Federal Government transitioned to a value target, the number of Supply Nation contractors rose substantially.
“It’s got to be more than good will, it’s got to be a real commitment to this stuff.”
“If all these initiatives were instigated and realised to their fullest potential, we’d be seeing a lot more Aboriginal businesses awarded a contract,” he said.
The WA Government overshot the APP more than twice over in the 2019-20 financial year, hitting a total of 5.55 per cent of contracts rather than the two per cent target. Two hundred and thirty-four contracts were given to Indigenous businesses, worth a total $172 million.
WA Finance Minister Tony Buti said the impact of the pandemic on the sector was part of the deliberations around targets.
“A consideration that impacted the decision to set the target for 2020-21 at three per cent was the unknown impact of COVID-19 on the Aboriginal business sector at the time of the announcement,” he said.
Minister Buti said prior to the Aboriginal Procurement Policy, only 78 contracts were awarded to Aboriginal businesses in 2017-18.
“In just the first two years of the APP in 2019-2020, contracts were awarded to 234 Aboriginal businesses,” he said.
“Since then, we have also seen an increase in registered Aboriginal businesses operating across the State, particularly in regional Western Australia.”
The Minister also said WA performs well against targets in other States and Territories as well as against the Federal IPP.
“The Commonwealth Government’s Indigenous Procurement Policy has value based targets with many contracts awarded to Aboriginal business valued at less than $10,000,” he said.
Minister Buti said the WA APP is “driven by percentage of contracts awarded” and that only contracts valued at $50,000 and over count toward APP targets.
“The average value of contracts awarded to Aboriginal businesses across the first two years of WA’s Policy is $659,776, highlighting that the WA Aboriginal Procurement Policy is performing well and using the current methodology,” he said.
But Cole believes the targets can be raised far more substantially and that a 0.5 per cent increase is far from enough.
“Aboriginal business is growing at a rate of 12.5 percent. If these targets were lifted, we could double that. The State Procurement targets probably should be set up to eight to ten per cent.”
By Sarah Smit