An Indigenous business?

Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.

This is the mantra of social commentators everywhere: anti-welfare and pro-free market. The argument goes that economic self-determination is the key to overcoming Indigenous disadvantage and will be achieved from employment, enterprise and entrepreneurship.

Whether you’ve noticed it or not, right now Australia is attempting to create a minority diversity economy and has begun with Aboriginal and Torres Strait Islander businesses (I believe women-owned businesses will be next, followed by LGBTI and those with disabilities).

But why would the Government do it? Are they being altruistic or pandering to the “guilt industry” (whatever that is)?

According to Swinburne University of Technology’s Professor Kevin Hindle, by improving Indigenous entrepreneurship, the concerns of both governments and Indigenous people could be simultaneously addressed. “What Indigenous people want most is autonomy. If they have economic autonomy, it is a win for both the government, which wants to end wastage of the welfare dollar, as well as for the Indigenous community, which wants self-determination not patronisation.”

In fact, the Government wins two-fold. They decrease expenditure whilst at the same time creating taxpayers. That Indigenous Australians may win out of the arrangement is largely incidental.

The Forrest Review into Indigenous disadvantage, Creating Parity, was the major contributor for Government policy in this area. The report states Indigenous businesses “employ more first Australian workers than other businesses”. The explanation for this is logical: being Indigenous drives their employment decisions and being in a company that’s majority Indigenous owned and controlled enables them to exercise this preference. In their social return on investment report on Supply Nation certified suppliers, called The Sleeping Giant, the authors find half of all employees in Indigenous owned businesses are Indigenous. They also claim “Indigenous businesses employ more than 30x the proportion of Indigenous people than other businesses.” The Creating Parity report readily admits if we want to increase Indigenous employment, building more Indigenous businesses is the best bang for buck (my words).

So if Indigenous ownership is such a key driver of Indigenous employment, why did Creating Parity recommend lowering the threshold to a minimum 25% Indigenous ownership? And why did the Commonwealth (who has most to gain from increased employment outcomes) adopt this in the Indigenous Procurement Policy?

Surely if we just create more “white businesses” and call them “black businesses” we won’t employ more blackfellas. With almost 2 million businesses in Australia and 15% Indigenous unemployment we’re not doing a very good job so far. Why does the Commonwealth think corporates will suddenly have an epiphany and start handing out jobs now?

In fact, some procurement managers of some of Australia’s largest (and hitherto committed) companies are already beginning to follow suit and explore the option of supporting 25% ownership businesses.

So what makes the discussion important is there are tangible social outcomes from identifying, supporting, fostering and growing an Indigenous business.

The support I speak of can be seen in the US marketplace. Certification with the US National Minority Supplier Diversity Council is a prized commodity.

The Australian experience has Indigenous businesses paying for booths at the Supply Nation trade show, and waiting for the corporates to wander past so we can try and convince them to take a risk.

In the US, it is the corporate that invests in the stand and it is the Minority Business that is wooed.

The difference is stark and it’s an interesting contrast. In fact, if you look beyond the US you find Australia is the only jurisdiction anywhere in the world where a business that is less than 51% minority owned is still classified as a Minority Business. So why are we so special?

Joan Kerr, the Director of Supplier Diversity and Sustainability at Pacific Gas and Electric (she was formerly at AT&T) has an enviable reputation for establishing diverse supply chains at significantly large companies. According to Joan, PG&E has successfully supported minority businesses. Some even run power stations. She says “the biggest impediment is prejudice. It’s people’s preconception that diverse suppliers don’t have the capacity or the capability to serve corporate supply chains.”

Perhaps that’s why Australia is so special.

NB: This article was first posted on LinkedIn and is republished here with the permission of the author.

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