This is the flip-side to welfare. And it builds on the innate skills within our people and brings them into the mainstream economy.
Given the value of supplier spend in New Zealand, what can organisations do to direct a larger portion of that spend towards Māori suppliers?
Total value of procurement contracts 2017-18
NZ$661 billionThe total annual supplier expenditure by NZ business and government in 2017-18 according to a Stats NZ Enterprise Survey
Engage with Supplier Diversity Agencies
Globally, supplier diversity agencies such as Supply Nation in Australia certify suppliers that meet certain criteria, including being owned by indigenous people and supporting local communities. The agencies create databases of certified suppliers and connect them with a network of corporate members. Outside the success of the Australian program, South Africa’s supplier diversity agencies have facilitated more than R$74million (NZ$7.5million) of business to their certified suppliers. Crucially, corporate member firms reported generating 133% higher returns on their procurement operations than companies that do not focus on supplier diversity.
Regulate procurement policies
The United States, United Kingdom, Canada, South Africa, Malaysia and Australia all have policies that mandate, or encourage the awarding of Government contracts to disadvantaged or minority groups. The policies include mandatory set-asides for fixed dollar amounts or a percentage-of-spend, with certain groups (including indigenous populations) being given preferential treatment in the contract award process. These policies have had varying levels of success for indigenous outcomes, summarised as follows:
- Increase in percentage of government and public-sector contracts being awarded to indigenous firm
- Increase in participation of indigenous businesses in the economy, thus enabling indigenous businesses to become more established and successful
- Economic value generation - in the United States minority-owned businesses are: twice as likely to export goods; export leaders in 14 key industry sectors; three times as likely to have international operations; six times as likely to transact business in a language other than English; contribute $US1 trillion to the American economy and; directly account for 7.2 million jobs
- Social value generation - in Australia for every dollar of spend with indigenous businesses, $4.41 of economic and social value was created through (for example) reinvesting in their communities or providing training to their staff
- Increased employment for indigenous communities - in Australia it has been shown that aboriginal businesses employ 30 times the proportion of indigenous people than non-aboriginal businesses
- Lack of indigenous suppliers or capable indigenous suppliers for certain contracts
- Negative impact of companies or passive partners where the company appears to be indigenous but delivers limited or no benefits for indigenous communities
- Criticism for benefiting indigenous business owners at the expense of indigenous communities at large
- Companies falsely claiming to be indigenous or falsely claiming to employ indigenous workers with limited government monitoring, leading to repercussions for non-compliance
- Lack of consistency and rigour around how social outcomes are quantified, thus rendering it difficult to evaluate bids and determine value
- Accusations that preferences restrict competition, thereby impairing economic efficiency and raising the cost of procuring goods and services
- Public opinion that affirmative action creates a culture of entitlement, complacency and mediocrity in indigenous businesses
The New Zealand experience
In the absence of a regulated procurement policy or recognised supplier diversity agency, indigenous procurement approaches, and (including social procurement generally) are not well established in New Zealand.
Often opportunities in New Zealand amount to suppliers providing apprenticeship placements in their businesses to relatively small numbers of Māori. Whilst not to be discouraged, such arrangements are sometimes compliance driven, rather than implemented for their ability to deliver sustainable social benefits. Furthermore, given the limited number of individuals able to benefit under this approach, opportunities to increase capacity and capability and enhance career progression pathways for Māori and Māori businesses are not always available.
Mechanisms to effect positive change for Māori
Challenged with using social procurement as a tool to effect positive change for Māori, New Zealand businesses have a suite of mechanisms available to them. Some of these are:
Summary
New Zealand business should accept the challenge to effect better social outcomes for Māori via enhancement of their procurement functions. To do this will begin to bring us into line with countries who are successfully achieving just that. In fact, when considered alongside our Treaty of Waitangi obligations to Māori as well as CSR responsibilities, taking on this challenge should not only act as a catalyst for positive change, but also put as at a distinct advantage over many who are currently walking this path.