Indigenous Australians This article is more than 2 years oldIndigenous entrepreneurs urged to verify their business to weed out 'black-cladding'
This article is more than 2 years oldA small number of businesses are seeking to take advantage of government procurement targets, researchers say
Indigenous entrepreneurs are being encouraged to verify their business as majority owned and controlled by Aboriginal and Torres Strait Islander peoples in order to weed out businesses engaging in “black-cladding” to secure contracts under government procurement policies.
The Australian government awarded $857m in contracts to Indigenous businesses last financial year under the Indigenous procurement policy, which in 2019-20 required that 3% of all contracts, and 1% of the value of all contracts, be awarded to businesses at least 50% owned by Indigenous people.
The policy, which was announced in 2015 and swiftly copied by state and territory governments and major corporate players, caused an “explosion” in Aboriginal-owned businesses, most of which were majority owned and controlled by Aboriginal people.
But Laura Berry, a Wiradjuri woman and chief executive of Indigenous business directory Supply Nation, said a small number of businesses were seeking to take advantage of Indigenous procurement targets by meeting the target for 50% ownership while being controlled by non-Indigenous people.
“Our preference would be that a business should be majority controlled, owned and operated by Aboriginal people … we think the goal should be 51% ownership,” Berry said.
Researcher Mark Jones, a Yawuru man, has interviewed 20 Indigenous business founders as part of a PhD into Aboriginal enterprises. Jones’s research is partly funded by the Victorian government’s Aunty Mary Atkinson scholarship program, named for the Wiradjuri and Bangerang elder.
He said Aboriginal business owners often judged the question of ownership against a higher standard than the 50% target set by governments.
“When you speak with these people you understand whether they’re an Aboriginal enterprise or not,” Jones said. “But black-cladding, where some organisations partner with an Aboriginal person and it’s not an equitable joint venture, also exists in the marketplace.”
Jones said that while Aboriginal people may be able to spot those businesses, government may not.
“One study participant said to me: we know Gammin when we see it,” he said. “Gammin” is a widely used word meaning pretend or inauthentic.
Businesses that were Indigenous-owned were more likely to employ Indigenous people, providing mentoring opportunities, and often regarded giving back to community as a core value, Jones said.
“There’s very much a sense of providing opportunity and sharing knowledge and mentoring,” he said. “That’s a core value of every enterprise or owner that I interviewed.”
There were almost 3,000 Indigenous-owned businesses registered with Supply Nation, of which one-third had been verified as majority Indigenous controlled and another third were majority Indigenous owned and controlled but had not gone through the verification process.
Berry said Supply Nation received daily updates from the Australian Securities and Investments Commission so it can conduct a rolling audit of the directors of registered businesses.
She said that while there had been some isolated cases of black-cladding, the overwhelming story of the past five years was the growth in genuinely Aboriginal owned and controlled business.
“We have seen in the last three years a 180% increase in the number of businesses registered with us,” she said. “The sector itself, pre-Covid, was growing at a rate of about 13% per year, which is way above the non-Indigenous sector.”
That had been driven by government procurement targets, which had seen the value of contracts awarded to Indigenous businesses registered with Supply Nation growing from $31m in 2015 to $952m in 2019.
“It would not have been able to grow at the pace that it has grown without it,” Berry said. “They have targets, they were publishing the targets, and they were publicly announcing progress against those targets – that’s what drove the change in spending behaviour.”
Jones calls the process “transactional reconciliation”.
“They are certainly driving Indigenous engagement through their supply channels,” he said.
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