Indigenous business thrives on opportunity

Local Aboriginal leaders hope WA can match the success of the federal government’s indigenous procurement policy.

Western Australia’s mining construction boom created enormous opportunities for indigenous businesses.

And while the best days of that period are long gone, the slowdown in that sector has coincided with emerging prospects in another field, which arguably offers greater long-term potential.

Since July 2015, when the federal government kicked off its indigenous procurement policy, 1,473 indigenous businesses across the country have won nearly 12,000 contacts valued at $1.83 billion.

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The numbers have been getting bigger each year, with about 4,600 new contracts valued at $802 million awarded in 2017-18 alone.

This was driven by a policy that required all agencies to award 3 per cent of smaller contracts to indigenous suppliers.

The opportunities will be larger after July 1, when the target will be based on the value of contracts awarded, rather than the number.

In addition, the mandatory indigenous requirements for larger contracts (over $7.5 million) will be extended to a wider range of specified industries. 

One business that has benefited from this rapidly emerging opportunity is Bunbury-based IPS Management Consultants, which was established by directors Katina Law and Damien Chalk in 2015.

NSW-based Kristal Kinsela-Christie joined the business in 2016, meaning two of its three directors are female and indigenous.

The business has grown to have 25 staff across the country, with about one third being indigenous.

Its recent recruits include 40under40 winner Jahna Cedar, who joined as operations manager.

Supply Nation, which runs a national directory of indigenous businesses, has twice selected IPS as its certified supplier of the year.

Mr Chalk said Supply Nation’s annual Connect conference, which attracted about 400 businesses this year, showed the scale of the sector.

“The entrepreneurial spirit and desire to achieve we saw there was so motivating,” he said.

“The energy is there.”

Ms Law said IPS has been on a journey of its own.

“When we started out, we didn’t really know what was possible,” Ms Law told Business News.

“It’s taken a couple of years to get the profile and scale and reputation you need to win more work.”

The federal government’s IPP has been a big driver of growth, whereas the state government’s one-year old Aboriginal Procurement Policy (APP) is yet to deliver.

“We’re starting to see more engagement with the state government but the Aboriginal procurement policy has not led to as much engagement as the Commonwealth,” Ms Law said.

“In the Commonwealth policy there is a mandatory set-aside, which basically means any contract between $80,000 and $200,000 they need to offer to an Aboriginal business first.

“We don’t have that in WA, it’s just 1 per cent of the contracts [due to rise to 3 per cent by 2020-21].

“In theory the WA policy is better, its anything up to $250,000 but (the agencies) aren’t using it because it’s not mandatory.

“They see it as too risky, they are too exposed, so they keep on doing what they have always done.

“Its quite hard for Aboriginal businesses to break in and start supplying to the state government.”

But the government says it has exceeded its target. A new report by the state government says 74 contracts have been awarded to 53 registered businesses, with a value of $25 million.

Finance Minister Ben Wyatt said the results were extremely positive.

“These results represent an enormous increase in the economic participation of Aboriginal people and also the delivery of another election commitment by the McGowan government,” he said.

“The benefits of contracting with Aboriginal businesses extend beyond the successful delivery of contracts and offer new employment opportunities for Aboriginal people throughout the state.”

New chamber

The Noongar Chamber of Commerce and Industry was launched about one year ago, about the same time as the state government’s APP.

Chairman Gordon Cole, who runs his own workwear and consulting businesses, is looking for a lot more from the state government.

“Line agencies are always going to struggle in the first year or so because it’s new,” he said.

“While we’re patient and understand that, we also know we have to get on with business.”

He believes the federal government’s indigenous procurement policy is going well.

“They’ve got a $2 billion spend, so they’re really cranking along,” Mr Cole said.

Gordon Cole. Photo: Gabriel Oliveira

“Non-traditional agencies like defence and the ATO are purchasing from indigenous suppliers, so there’s no reason why the state government agencies could not get a lot more involved.”

The chamber’s executive officer, Tim Milsom, has recently seen some of the challenges involved in boosting indigenous businesses.

“Just last week we sat down with government as part of an Aboriginal business engagement roundtable to investigate some of the barriers to entry,” Mr Milsom told Business News.

“It was a really robust discussion and not an easy one for them to have because some of the barriers almost preclude Aboriginal businesses from getting involved, but they’re starting to think this can be done.”

Mr Cole pointed to the construction of Optus Stadium and Yagan Square as positive examples of what can be achieved.

“The work that’s been done at the stadium with our elders and our people has been fantastic,” he said.

“It’s been a phenomenal success because our people were there at the front end, at the planning and design stages.”

Mr Cole has been pleasantly surprised by the growth of the chamber, which does not yet charge fees.

“As of last Friday week, we have 300 members, associates and corporate members,” he said.

“I didn’t anticipate we would get that many in the first 12 months.”

The vast majority are 51 per cent-owned and operated Noongar businesses.

Other businesses can join as associates, while corporate partners include Macmahon, Perkins, WBHO, Fulton Hogan, Cannings Purple, Lavan and Jackson McDonald. 

Mr Cole suspects a lot of the chamber’s members are not certified members of Supply Nation.

“A lot of them have come into business, I guess startups, because the Noongar chamber is in place so they have somewhere they can go to,” he said.

“They are more comfortable with us.”

Mr Cole said the chamber was built around Noongar cultural protocols.

“The baseline philosophy is that Noongar people and Aboriginal people were involved in commerce and trade prior to 1829,” he said.

“We had a system where we bartered, we had transactions.

“Colonisation interrupted that so now we’re just reclaiming our commerce and trade back.”

Mr Cole believes Noongar cultural traditions (including the six seasons) and family obligations have a big bearing on business.

The chamber is planning to launch specific services, including a procurement centre, to help its members win work.

“We want people to understand the realities of pre-qualification processes, accreditations, the financial and legal compliance obligations, so they are ready to take on contracts,” Mr Cole said.

“We also want the Noongar space to be the digital technology space, that’s a huge area.”

Competition

Ms Law believes one reason IPS has been successful is that it offers similar services to other consulting firms.

“The services we offer are very mainstream,” she said.

These include research, leadership training, organisational development and business capability.

While it does a lot of work for the federal government and Aboriginal groups, Ms Law emphasised IPS worked beyond those markets.

Corporate clients, for instance, include Mineral Resources, Acciona, Lendlease, Arup and BAE.

Mr Chalk believes the firm’s can-do attitude is a big factor.

“We can transact, we can take a strategy, find a way to get it done and deliver a result,” he said.

“We get results with our people, through our people; we develop our people and give them opportunities to do things they’ve never done.”

Ms Cedar said the firm’s work also included advocacy on behalf of other Aboriginal organisations.

“Its about keeping agencies accountable,” she said.

“Sometimes those smaller groups don’t have the right networks to be heard, they can come to us and know we will champion their cause.”

Ms Law is positive about how far the indigenous business sector has come.

“There has been an enormous amount of progress and there are enormous opportunities for people who want to take them up,” she said.