Targets work for Indigenous procurement, but Closing the Gap is a whole other ballgame


The Prime Minister wants the public service to spend vastly more with Indigenous-owned suppliers, hoping to double down on the success of affirmative action in procurement, but risks overstating the policy’s likely impact on employment.

Commonwealth departments have been told to ramp up spending with Indigenous companies to 1% of their total procurement outlay in 2019-20, and keep increasing it by 0.25% annually for the next eight years. By 2027, that could mean Indigenous suppliers win contracts to provide well over $2 billion worth of goods and services to the federal government every year — more than the total since the Indigenous Procurement Policy began in mid-2015.

In 2020-21, mandatory minimum Indigenous employment and subcontractor participation targets that currently apply to eight industry sectors will be expanded to more industries, the details of which are yet to emerge.

The Prime Minister announced the latest changes to the IPP, which will carve out 3% of total spending by 2027, as he presented this year’s Closing the Gap report. As expected, it’s a similar story to last year: some progress towards the ambitious social equity targets set in 2008, but not as much as originally hoped.

The reporting has been updated against four of seven targets; the data on the other three hasn’t changed since last year. Of those four with updated data, one is presently “on track” to be met: to have 95% of Indigenous children in early childhood education by 2025. The aim to halve the gap in Year 12 attainment by 2020 is still listed as “on track” based on the same data as last year.

New statistics on the procurement policy were among the good news in a fairly confronting speech from Scott Morrison, who said the idea of CtG targets to work towards was “set up to fail” despite its good intentions, but could hopefully be improved through the “refresh” process set up by his predecessor, Malcolm Turnbull.

Governments fail when accountabilities are unclear, when investment is poorly targeted, when systems aren’t integrated, and when we don’t learn from evidence,” said the PM.

CPSU points to Indigenous affairs workforce cuts

The responsibility for not achieving the goals of the CtG targets rests on successive governments, of course. For its part, the Coalition has not only put its stamp on Indigenous affairs policy, but also effected major bureaucratic and ministerial changes since coming to power in 2013.

The public sector union argues that in the process of merging the public service line into the Department of the Prime Minister and Cabinet, and shifting focus in key policies, it has undermined progress towards closing the gap by cutting staffing from the area.

The Community and Public Sector Union claims PM&C has shed about 100 staff in places outside Canberra since mid-2015 and assumes the “vast majority” were related to Indigenous affairs on the basis that the department had no staff outside the ACT until it absorbed the policy area in 2013.

The union’s deputy national president Brooke Muscat-Bentley said 40 of the job cuts were in the Northern Territory, and claimed PM&C had reduced the Indigenous affairs workforce by over 10% in less than four years.

“These job cuts are a double body blow for Indigenous people,” Muscat-Bentley said in a statement.

“Clearly this has an impact on the important services that Indigenous Affairs provides, but these positions that have been cut were also desperately needed permanent, quality employment opportunities for Aboriginal and Torres Strait Islander people.”

Morrison said the upcoming changes to the CtG framework would create new “clear responsibilities” for states and territories, the Commonwealth, and Indigenous Australians themselves, with progress subject to “regular independent Indigenous-led reviews” in the future. He also said he wanted to focus on educational outcomes in particular — the same area in which the only two on-track CtG targets are found.

Where the procurement policy fits in

Affirmative action in federal procurement aims to drive growth among Indigenous-owned businesses, and is touted as a way to increase the employment rate among Aboriginal and Torres Strait Islanders as well. Indigenous enterprise means Indigenous jobs,” said Morrison, later adding that “it is through the development of small, family and medium sized Indigenous businesses that we will tackle the Indigenous employment gap”.

Some evidence suggests Indigenous-owned employers generally hire a lot more Indigenous people, but the IPP is unlikely to make a huge contribution to closing the employment gap; the department said last year it was “a small business policy, not an employment policy” when asked about this. Based on its actual stated aims in terms of procurement, however, the policy is considered a great success.

Since mid-2015, 1473 Indigenous-owned companies have benefited to some degree from almost 12,000 contracts worth a combined $1.83 billion. In 2017-18, all portfolios hit their targets of 3% of their contracts by number, but they were nowhere near 3% in terms of monetary value, which is the next challenge set for procurement teams.

A table published by PM&C, along with the latest IPP statistics and next year’s targets, shows how big that new challenge is. In 2017-18, the Australian Public Service as a whole smashed the target of 3% of contracts by number, but the total value of about $800m is only a small fraction of total procurement. Contracts published on AusTender in 2017-18 will be worth an estimated grand total of $71.1 billion by the time the work is completed.

Portfolio Target
2017–18
Contract count against
target
Total value
Home Affairs 174 856 $10.9m
Human Services 106 708 $25.7m
Defence 420 612 $485.2m
Communications and the Arts 28 525 $46.5m
Prime Minister and Cabinet 38 395 $31.2m
Environment and Energy 84 299 $25.6m
Treasury 114 275 $30.8m
Jobs and Small Business 44 216 $9.4m
Health 73 195 $28m
Industry, Innovation and Science 90 187 $32.2m
Foreign Affairs and Trade 78 179 $12.2m
Attorney-General’s 52 179 $7.5m
Education and Training 21 174 $9.2m
Agriculture and Water Resources 31 112 $7.5m
Social Services 38 84 $6.8m
Infrastructure, Regional Development and Cities 48 78 $23.6m
Finance 48 64 $4.6m
Veterans’ Affairs 25 53 $3.3m
Parliamentary Departments 25 44 $1.7m
Total Commonwealth 1,537 5,235 $802.2m

 

The average value of about 9,880 contacts awarded via the IPP over a three-year period was $166,826 and in that time, 84 were valued over $1 million.

In 2017-18 PM&C says there were 4,597 new contracts worth a combined $802 million awarded via the IPP, benefiting 735 Indigenous businesses, and for 366 of those it was the first time they have inked a deal with a federal agency. It’s not clear exactly why the total number of contracts in the table is slightly larger than the overall figure reported earlier by PM&C, but the method of counting them set out in the IPP document is not exactly simple.

Laura Berry, chief executive of Indigenous business directory service Supply Nation, believes the new 3% value target is achievable over the next eight years. The IPP demonstrated the power of public accountability, and proved procurement could be a force for social good, she said in a statement welcoming the changes.

“The Indigenous Procurement Policy demonstrates that setting targets, monitoring them and reporting on them publicly can have a transformative effect on buying behaviours and further, on an entire business sector.”

Targets only work for some things

In the much more broader challenge of Closing the Gap across seven indicators of social equity, however, Morrison suggested policymakers had put too much faith in the power of public accountability.

Target-setting has been shown to focus policy development and implementation in some cases, while it can also create unintended consequences through perverse incentives. In this case, however, it seems the challenge is the accountability for meeting the targets is spread across so many different actors their influence is diluted.

The PM said the process was “born of good heart” but with outcomes consistently falling short in most cases, he claimed it reflected “hubris” on the part of Canberra’s politicians and public servants, as well as a failure to “partner” sufficiently with Aboriginal and Torres Strait Islander communities.

He suggested public servants and politicians were over-confident in their ability to close the gap with a “top-down approach” driven from the corridors of power, and derided their belief that “lofty goals and bureaucratic targets” would engender greater social impact.

In what has become a familiar yearly ritual, Morrison aimed to blend hope with self-flagellation. He acknowledged where positive progress had occurred and committed to trying to achieve more, after opening with a horrific tale of rape and murder to illustrate “hopeless dysfunction” he said afflicted the lives of many Indigenous people.

“While I am not going to pretend today that this situation does not remain in an unforgivable state, I am going to say that we can never rest as a nation until we change this for all time,” he told parliament.

At the same time, the Queensland government had just released its own Closing the Gap report card, becoming the first state to do so, amid hopes that a new agreement between the states and territories will lead to faster progress.

The new arrangements are expected to be finalised through the Council of Australian Governments by the end of this month.

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