BUILDING INDIGENOUS BUSINESS
Aboriginal Participation Contents
Indigenous Business Advisory Group 2018
INDIGENOUS BUSINESS DIRECT
SUPPLIER DIVERSITY AND PROCUREMENT Omesh Jethwani, Government Projects & Programs Manager in-conversation with Laura Berry, CEO Supply Nation on the rapid growth and demand for Indigenous owned businesses. OJ Please share with our readers the details of your ancestral family background. I proudly identify with my Aboriginal (Wiradjuri) and Italian heritage. My father was a proud Wiradjuri man, born in Central-West NSW. My mother, Italian Australian. I was born and raised in Canberra. OJ You have quite an impressive resume with over two decades of experience in stakeholder management, risk mitigation and reputation management. Your career has spanned the private and public sectors, including Federal and State Politics, Public Affairs and positions with top ASX Listed companies. How did you come to take on the role of CEO at Supply Nation? I have been working with Supply Nation since its inception back in 2009 — firstly as a member through my role within Leighton Holdings and Qantas and later as a board director. The concept of supplier diversity as a driving force in developing economic power for Indigenous people intuitively made sense to me – my father owned his own landscaping
business, and like any small business, our family was highly attuned to the vagaries of cash flow. This was long before any government policies like the Indigenous Procurement Policy. But all that changed when he won a government contract. Suddenly he had guaranteed cash flow. He could plan, he could grow. It made an enormous difference to our whole family. So I’ve seen first-hand how supporting Indigenous businesses makes a real difference. When the Chairperson of the Supply Nation board approached me about applying for the CEO role, I was excited to give it a go — to roll up my sleeves and help achieve Supply Nation’s vision of a vibrant, prosperous and sustainable Indigenous business sector. OJ In September 2018, you were listed as one of ‘The Australian Financial Review 100 Women of Influence’ and joined a host of women to rise to positions of influence. How has your journey been since you were recognised by the Financial Review? September doesn’t seem like that long ago! I guess the most significant difference is that as a women leader, I’m being recognised and that’s
flowing on to the organisation and what we’re achieving. It’s such an honour to be recognised amongst so many incredible, successful women. It’s an excellent opportunity to build my connections and network further to help drive even further success. The AFR 100 Women of Influence Alumni is strong and supportive. OJ What were the influential factors that gave birth to the inception of Supply Nation? Supplier diversity isn’t a new concept — it was born from the civil rights movement in the US in the 1940s. They founded the National Minority Supplier Development Council (NMSDC) that still runs today. There are over 45 years of data illustrating the business benefits (to the procuring organisation) of a diverse supply chain. Supply Nation was patterned after the NMSDC, but the impetus to bring it into being didn’t happen in isolation: our founding in 2009 was a response to a specific set of circumstances which drove a renewed focus on Indigenous economic affairs. Following the Mabo decision in 1992, the Council of Australian Governments published their “National Commitment to Issue One | January-March 2019 | MBA NSW
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BUILDING INDIGENOUS BUSINESS Improved Outcomes in the Delivery of Programs and Services for Aboriginal Peoples and Torres Strait Islanders.” In 1993, the first National Indigenous Business and Economic Conference (NIBEC) conference was held in Alice Springs, as part of a national springboard bringing Indigenous business and economic affairs to the forefront of government thinking. Over the next few years, many Indigenous business leaders worked together to identify the best way to support Indigenous business growth. In 2008, The House of Representatives Standing Committee on Aboriginal and Torres Strait Islander Affairs held an inquiry into Indigenous Economic Development which published a report of its findings called, “Open for Business”. This report recommended to the Federal Government that an Australian Indigenous Minority Supplier Council (AIMSC) be established to follow the US model (NMSDC). The Federal Government announced it would invest $3 million to pilot the Australian Indigenous Minority Supplier Council (AIMSC) over three years in 2009. On 15 September 2009, AIMSC was officially launched at the Mural Hall in the Australian Parliament House in Canberra, and in 2012, after completing the pilot, AIMSC rebranded as Supply Nation. OJ Is Supply Nation a not-for-profit entity and is the organisation funded by the Commonwealth Government? Yes, Supply Nation is a not-for-profit organisation. We have also recently been
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OJ Who are members of Supply Nation and what is Supply Nation’s national role in Australia’s business landscape? Supply Nation was founded with 32 members. Since then the organisation’s membership has grown to over 400 of Australia’s largest organisations, including governments at all levels (federal, state and local) and some of Australia’s most recognisable brands — including most tier 1 building and construction companies.
Laura Berry presenting at Connect 2018. granted deductible gift recipient (DGR) status by the Australian Tax office and are a registered charity, so people can make tax-deductible donations to support our cause. Supply Nation derives the majority of its funding from nongovernment sources. Today, approximately a quarter of our revenue is from the Government – in ten years we’ve managed to reduce our reliance on government funding significantly. The remainder of our income is generated through membership fees and fee-for-service work.
Supply Nation continues to work towards our vision of creating a prosperous, vibrant and sustainable Indigenous business sector not just through our work with our members (supporting them to develop their supplier diversity programs and engage Indigenous suppliers) but also through influence on federal and state government policy. Supply Nation also works with industry peak bodies like the Business Council of Australia to shape policy and drive the benefits of a diverse supply chain. OJ In the last five years, has there been an increase in Aboriginal businesses in the Building and Construction Industry? The whole Indigenous business sector has grown exponentially in the last five years. The Federal Government’s Indigenous Procurement Policy has hard targets of 3% of all contracts to be awarded to Indigenous business, as well as the minimum requirements for Indigenous employment and / or Indigenous supplier use, and the mandatory set-asides for contracts either in remote areas or based anywhere between the value of $80,000 and
BUILDING INDIGENOUS BUSINESS
The launch of this policy in July 2015 has driven enormous growth in the sector, with 461 (over 26%) of businesses on Indigenous Business Direct reporting that they work in building and construction. 17% of our reported spend from our members has been in building and construction and, the Federal Government have spent around 40% of their over $1 billion spends over the last five years with Indigenous businesses in the building and construction sector. In addition, various state and territory governments either have or are in the process of following suit with their own state-based Indigenous procurement policies. The NSW Government also has their Aboriginal Participation in Construction (APIC) directly targeting construction.
entities? The new changes to Joint Venture Registration have tightened up the requirements around which joint ventures are eligible under the IPP. The main difference is that Incorporated Indigenous joint ventures must register with Supply Nation and be at least 50% Indigenous owned, managed and controlled. There are additional requirements to demonstrate how the JV will build the capacity and capability of the Indigenous partner. Supply Nation welcomes this change as it strengthens the requirements on the Joint Venture partners and reinforces our value proposition that any business on our directory is a verified Indigenous business. OJ How will the IPPJVR impact on contracts with Indigenous joint ventures that are 25% Indigenous owned? Indigenous joint ventures that are 25% Indigenous owned will no longer qualify for engagement of Commonwealth contracts under the Indigenous Procurement Policy.
OJ What is Indigenous Business Direct? Indigenous Business Direct is Supply Nation’s publicly accessible directory of Indigenous businesses. It’s the largest national database of Aboriginal and Torres Strait Islander owned companies in Australia and is mandated by the Federal Government as their first point of call when searching for suppliers. With sophisticated searching and matching functionality, users can find Indigenous businesses by sector, service, product or keyword; and filter by location. In addition, Supply Nation members receive access to enhanced gated content to provide more context when shortlisting, saving and sharing their lists. OJ How does Supply Nation ensure the quality of a business which is listed on Indigenous Business Direct? Supply Nation has a rigorous five-step verification process that ensures that every business in our directory is Indigenous owned. Our process is globally recognised and based on decades of experience from around the world. We do not vouch for the capability of individual businesses and stress that all applicable procurement processes should be followed as for any contract with any company. OJ In October 2018, the Department of Prime Minister and Cabinet announced changes to the Indigenous Procurement Policy Joint Venture Registration (IPPJVR) which took effect from 1 January 2019. What are some of these new changes and what impact will it have on business
is a range of requirements that a JV must demonstrate. The aim of this is to ensure that the JV does reflect a true collaboration between the parties. OJ How will Supply Nation verify the application for registration as a joint venture? In verifying an application for registration as an incorporated joint venture, Supply Nation will follow its world-leading five-step verification process which has been reviewed and approved by the Federal Government to provide a definitive judgement about the status of the JV. OJ Why become Supply Nation Certified? Is there a difference in being Supply Nation registered and Supply Nation Certified? Supply Nation is the only verification body in Australia that provides two levels of verification: Supply Nation Registration and Supply Nation Certification. To become registered, a business must demonstrate that it is at least 50% owned by an Aboriginal and/or Torres Strait Islander person. To become Supply Nation Certified, a business must demonstrate a higher level of Indigenous ownership (a minimum of 51%) in addition to showing that Indigenous people manage and control the business. The business owner is interviewed to ensure that they can demonstrate management and control of the company. In addition to random or spot audits, every business on Supply Nation’s directory is audited annually.
OJ What documentary proof is required to demonstrate compliance for registration as a joint venture? Incorporated Indigenous Joint Ventures must provide a range of documentation to demonstrate Aboriginality or Torres Strait Islander heritage of the owners and managers; governance documentation and operational plans. For more information, please contact Supply Nation. OJ What criteria must a joint venture meet to become and remain registered with Supply Nation? Under the new guidelines, to become registered with Supply Nation, a JV must meet and maintain all requirements including ownership, control and management and other elements specified in the IPPJVR. For more information, please contact Supply Nation. OJ How does a joint venture demonstrate commercial independence? To be Commercially Independent, there
OJ What are the mutual business benefits of joint ventures between Indigenous and nonIndigenous construction companies? There is a range of benefits that accrue to both the Indigenous and non-Indigenous partners in a joint venture in the construction sector which has driven these new requirements. It allows the Indigenous construction company to access opportunities under the IPP for which they may not previously have had a chance to bid; helps support capacity and capability building and provides opportunities for increased and enhanced employment outcomes. OJ What do you think are some of the ongoing challenges and barriers faced by Indigenous businesses? Are there any specific industries where Indigenous companies may meet higher challenges and obstacles? Aside from the challenges faced by all businesses as they grow and scale, Indigenous businesses also face additional challenges and barriers unique to the sector. Common challenges we see with our members Issue One | January-March 2019 | MBA NSW
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Aboriginal Participation Contents
$200,000. These all impacted the building and construction industries. For major projects over $7.5 million such as infrastructure projects, there are mandatory requirements for Indigenous employment and Tier Two contracting.
Contents Aboriginal Participation
BUILDING INDIGENOUS BUSINESS (the buying organisations) when they are building supplier diversity programs include the assumptions that are made about Indigenous businesses – that they only operate in the cultural, performance or arts sectors; or that they are all small and based in remote areas; or that they can’t be expected to compete with the big end of town in terms of quality, service and price.
have designed our world-leading verification processes to weed out.
There are amazing cultural, performance and arts businesses — but there are also cryogenics, construction, consulting, cleaning and climbing gear companies. Some Indigenous companies are small — but some are winning some of the most significant government contracts being put to tender. The majority of Indigenous businesses aren’t based in rural and remote areas — in fact, the similarities with the broader Australian business sector are more striking than the differences.
OJ There is an ongoing debate with differing opinions about the various terminology references on Government tenders, Government policies and Government agreements. To create certainty, how would you describe the following:
The challenge of changing ingrained organisational processes to allow more Indigenous businesses ‘a seat at the table’ is real. The cultural competency of the organisation makes a huge difference: when the skills exist to do business well, typically the organisation is more able to engage Indigenous enterprises to and develop rich and rewarding business relationships. In addition, the same skills that are necessary to create diverse supply chains also help build and nurture diverse teams — with all the benefits that flow on from them. In addition to the buyer-side challenges, Indigenous people face other challenges within their business. With a lack of access to intergenerational wealth, finding the funds to grow and scale business can be challenging. With a lack of networks that many business owners gather through a lifetime of education and inter-generational networking, many Indigenous people lack coaches, mentors and role models in the business. OJ How would you respond to cynics who suggest that some Indigenous businesses are just a sham; established to secure an ‘easier’ pathway to Government contracts; that perhaps only a token presence of indigenous people on the board legitimises the business? Supply Nation’s reputation rests on our verification processes. We have verified the ownership of every single business that is live in our directory — checking percentage ownership and the Indigenous heritage of each owner. If a question about a company is brought to our attention, we immediately de-list the business from our online directory pending a full audit process. The practice of having an Indigenous ‘figurehead’ is often called “black cladding” — and it’s something we consciously test for and
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So if you want to be sure the Indigenous business you are engaging is legitimate, search for them on Indigenous Business Direct. If they’re not there, encourage them to register — it’s free and only takes a few days to process at our end after they complete a ten-minute online process and upload some documentation.
a. NSW Aboriginal Participation in Construction Policy – this policy applies to any tier 1 contractors winning NSW State Government contract in the
construction sector. They must adhere to a minimum of 1.5% participation target (participation being employment and procurement). More information is available here: https://www.procurepoint. nsw.gov.au/system/files/documents/ apic_policy_june_2018_final.pdf b. NSW Aboriginal Procurement Policy (APP) – this policy aims to award for at least three per cent of the total number of domestic contracts for goods and services issued by NSW Government agencies by 2021 to Aboriginal businesses. More information available here: https://www.procurepoint.nsw.gov. au/system/files/documents/app_policy_ may_2018.pdf
• More details here: https://www.pmc. gov.au/indigenous-affairs/economicdevelopment/indigenous-procurementpolicy-ipp d. Indigenous Enterprise: For the Federal Government’s Indigenous Procurement Policy, an Indigenous enterprise is at least 50% owned by Aboriginal or Torres Strait Islander people. ALL businesses listed on Supply Nation’s Indigenous Business Direct comply with this definition. e. Inclusive Procurement – this is another term for supplier diversity (our preferred term) which describes a procurement process that consciously leverages spending strategically in the supplier selection process - evaluating and including diverse suppliers. f. Social Procurement – this is a term that values the social impact of the procurement process – whether that is employment or environmental and therefore drives procurement from social enterprises or suppliers that can demonstrate positive social effects. g. Supplier Diversity – broadly this describes a procurement strategy that minimises risk by actively creating a diverse supplier base (using businesses that are minority-owned) in the procurement of goods and services for any company or organisation. In Australia, the term is more commonly used to describe the procurement strategy to include Indigenous owned businesses in an organisation’s supply chain. OJ Indigenous businesses are more likely than non-Indigenous businesses to employ Indigenous Australians. However Indigenous companies are not participating in Government contracting opportunities at a level comparable to non-Indigenous businesses. Do you agree with the statement?
• A mandatory set-aside for remote contracts and contracts valued between $80,000 - $200,000
Research does show that Indigenous businesses employ other Indigenous Australians at up to 100 times the rate of non-Indigenous businesses. So, engaging Indigenous companies is a great way to impact employment for Aboriginal and Torres Strait Islander people positively. Indigenous people make up around 3% of the Australian population, but only own 0.5% of Australia’s businesses — so there’s a significant discrepancy there.
• Minimum Indigenous participation requirements in contracts valued at or above $7.5m in certain industries.
The Federal Government’s target in the IPP mirrored population stats — in that it mandates 3% of contracts going to Indigenous
c. Commonwealth Indigenous Procurement Policy – this is the Federal Government’s Procurement Policy launched in 2015 which has three main parts: • A target number of contracts that need to be awarded to Indigenous businesses
BUILDING INDIGENOUS BUSINESS
OJ What advice would you give to organisations working with Aboriginal businesses in the Building and Construction Industry? I think the most critical piece of advice is to be aware that there are Aboriginal and Torres Strait Islander suppliers in the construction industry from small to large, some capable of delivering large projects as a primary contractor. Other than that — I’d recommend looking to engage Indigenous businesses early on in the project — consider the procurement opportunities on projects and look for suitable companies at an early stage. You may find that you can break down procurement into smaller packages if it’s challenging to find Indigenous suppliers that can service large work packages. Look for networking opportunities such as Meet the Supplier events, Trade Fairs, or our flagship event Connect (held this year on 8/9 May in Sydney), as a way to meet Indigenous suppliers. Businesses can conduct opportunity analyses and invite suitable Indigenous business in to be briefed on the opportunity or opportunities, the tendering process and prequalification process.
Part of building the segment includes providing opportunities to develop capacity and capability in your suppliers so that they can take on larger pieces of work down the track. So, get in touch with us at Supply Nation if you’re not already a member. Each member is allocated a dedicated relationship manager who can work with companies to set policy, procedures and targets and communicate these throughout their organisation so that people know why and how to engage with Indigenous businesses! OJ Non-Indigenous building and construction organisations who have successfully been awarded Government projects in regional NSW are struggling to source Aboriginal builders and subcontractors. How can these organisations be further assisted? Australia is in the midst of a construction boom and, as contractors try to fulfil their IPP obligations, there is a lot of competition for both Aboriginal subcontractors and skilled / unskilled labour. This is particularly exacerbated in regional areas where there isn’t the always the Indigenous businesses to meet the demand. Is it also a question of supplier capacity and capability? Are there enough Indigenous-owned businesses and skilled/semi-skilled workers to fulfil the requirements of large-scale government jobs, particularly in regional areas? This could be an opportunity for primary contractors to proactively identify suitable Aboriginal-owned businesses pre-tender phase
and then work with them to develop capacity over time. It could also be an opportunity to explore Joint Ventures with an Indigenous business either directly or with their existing sub-contractors. Failing this, in NSW the APIC policy identifies four types of eligible spend for Aboriginal participation. Contractors have the option of approaching Aboriginal participation a little more creatively by considering some of these options to help boost their performance. The four types of participation are: • Through employment - including apprentices, trainees, office support roles and labour-hire • Through the engagement of Aboriginal-owned businesses to provide related goods and services to the project. This might encompass raw materials, cleaning and maintenance, onsite catering or professional services • Through education and training • Through engagement / consultation OJ What exciting events or projects can we expect from Supply Nation in 2019? Its Supply Nation’s tenth birthday year, so there will be a few celebratory events over the year. Connect 2019 is looking like being the biggest on record, and we have some exciting new digital developments coming that will provide additional support and insights to help the sector grow! We’re also excited to be announcing some ground-breaking new partnerships – stay tuned!
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businesses. We know that this has been achieved — and exceeded. However, this is 3% of the number of contracts rather than the value of contracts — which is why there is also a target on Indigenous employment by head contractors. There is still a tremendous opportunity here!