How the new 5% social procurement target for NZ local + central government agencies will address inequities in Aotearoa

The NZ government have confirmed a new social procurement policy as a tool to improve social and economic outcomes for all. As a direct result Māori enterprises are in line for exciting new opportunities to do business with government agencies under a new social procurement initiative to spread the benefits of the economic recovery. 

Late last week, in a surprising but exciting revelation for those beyond the four walls of the beehive, the NZ government announced a new minimum target for government agencies to meet when they undertake procurement. 

From 2021, agencies will need to ensure at least 5% of their procurement contracts are awarded to Māori businesses. This change is intended to remove barriers for businesses to bid for contracts, and acknowledges the role government agencies play in growing the diversity of suppliers by providing epic new opportunities for Māori owned and registered businesses. 

I personally love this type of bold economic policy as we face the unprecedented economic challenges ahead of us and although it's light on detail right now, based on the release, the approved targets provide an approach that empower Māori businesses and communities. Indigenous procurement offers an innovative opportunity to support better economic and social outcomes for all kiwis not just NZ Māori.

The Government’s policy is built on the work led by the minister of Te Puni Kōkiri, Will Jackson in partnership with MBIE to create better access for Māori businesses to engage with government procurement, which is supported by a whopping $7.3 million Budget 2020 investment. (3)

In the announcement post cabinet approval, Māori Development Minister Willie Jackson says the government spends $42 billion a year on procurement of goods and services. “We are looking for more ways to use this buying power to accelerate the economic recovery for Māori businesses,” he said. 

“This approach will support Māori businesses to participate in our economic recovery as we build back better,” he says.

The project team, Te Kupenga Hao Pāuaua is currently prototyping social procurement approaches in target segments such as ICT spend with the aim of reducing barriers for Māori businesses partnering with both local and central government agencies from Councils to DHB’s and everything in between. 

Why should you care? What does this mean? Why Now?

In Aotearoa even in 202 the topic of social procurement is an extremely HOT and sensitive one.

Even as proud Māori owned and registered business evidenced by the process to become an approved supplier of Amotai (https://amotai.nz/) - Aotearoa's Māori business registry (where The Instillery is the largest of only 6 registered NZ Maori owned ICT service providers), I hesitated to write about this topic due to the risk of it sounding self-serving and or wading into the debate as to whether we are "Māori enough" to have a perspective on this...

But... then I reflected as to why this is such a core part of who we are here at The Instillery.

We started The Instillery to give Aotearoa a new world class homegrown choice, by providing a new flavour and vibe of trusted ICT partner. With the NZ government as the single largest spender on ICT services in Aotearoa. This has the potential to elevate so many....

You see, for us it has ALWAYS been about disruption, impact and legacy over profit, we are clear on who we are for - the visionaries and those leaders of both private/public sector organisations with backbone not just a wishbone!

So, with this as the fuel that fires The Instillery whanau each and every day, I decided that this exciting social procurement development is too important not to firstly share for awareness and to also speak up in support of the societal change we are striving for here in Aotearoa.

Globally, I have personally been following this indigenous procurement concept since our inception in 2013, in this part of the world, it is more commonly referred to as ‘social procurement'. 

Today (based on Treasury data released in October 2020) the NZ central government agencies alone spend nearly NZ $3 billion per annum on ICT operational expenditure and NZ $1.2 billion per annum on capital investment. Of which 50% of the combined annual spend above is spent on ICT Professional, Consulting and Managed Services like those delivered by The Instillery today. 

I can only dream of the positive impact we could make for our own whānau and the communities in which we work, live and play across Aotearoa with even 1% of that investment but its more than the $ its about the value that we could impart on a scale never seen before. 

Social procurement is the concept of building diversity and equity into an organisation’s or country’s buying habits and as this occurs, there are community benefits that go far beyond the exchange of money for goods.

At the time of writing, social procurement policies are not widespread in Aotearoa, and through our work in Tāmaki Makaurau, Kirikiriroa and Te Whanganui-a-Tara, I'm only aware of 2 organisations that even ask whether or not a prospective supplier is a Māori owned entity - let alone include it in the weighted scorecard of a procurement process.

Research has shown that companies with long-term supplier diversity and social procurement programmes can generate 133% higher return on investment than those without diversified supplier networks. (1)  

As a little plug for the crew at Amotai (formerly known as He Waka Eke Noa), I virtually attended the inaugural Waikato Social Procurement Buyers Conference and was left inspired and highly motivated that there is a new generation of government, council and local business leaders committed to breathing life into this important initiative confirmed last week through the approval of the all of government targets.

Having seen similar regulatory policy implemented by the governments of Canada and Australia, businesses can play a critical role creating community and social benefits. 

Australian research has shown that for every dollar of revenue indigenous businesses create AUD $4.41 of economic and social value.(2) The economic benefits are projected to be on a similar scale here in Aotearoa.

But from what I can distill from the global research and conversations with local government leaders we already do business with today, we know that initiatives like this thrive when rock solid partnerships are established, they are critical to empowering our community and ensuring the positive impact of the proposed social procurement policy is felt through the creation of new jobs, prosperity combined with economic growth.

Embedding social procurement as best practice is vitally important and as an industry I'd love your collective support to drop the 'hand-out' label and see this for what it truly is - "a hand up" - with the end-game being to create equitable access to market opportunities. This change acknowledges that there are existing barriers for all businesses, specifically for not only Maori but all indigenous businesses including Pasifika, and by removing these, will increase competition and create economic growth and development opportunities overall. 

In many ways, as we chase the economic bounce on the back of the impact of Covid on the kiwi economy, I genuinely believe that our future national success will depend on the ability of the government to ensure rangatahi Māori gain and retain employment. This will require an approach that produces equitable outcomes, which will in turn protect and foster opportunities to grow Māori employment and businesses.

It's for this reason we welcome the social procurement target and think it’s a great stepping stone to creating a more inclusive, equitable and prosperous society and economy here in the land of the long white cloud.

References

1 Jones, D. (2006, August 21). Benefits of Supplier Diversity May Go Beyond ‘Social Good’. The Wall Street Journal. https://www.asbfeo.gov.au/news/news-articles/indigenous-businesses-sector-among-fastest-growing-australia

2 Carnell, K. (2020, November 10). Indigenous businesses sector among fastest growing in Australia. https://www.asbfeo.gov.au/news/news-articles/indigenous-businesses-sector-among-fastest-growing-australia

3 Hon Stuart Nash & Willie Jackson. Original announcement: “Increase Supplier Diversity through new procurement target” https://www.beehive.govt.nz/release/increase-supplier-diversity-through-new-procurement-target-maori-business?fbclid=IwAR1DFc-FkFeyptPQptwav9HCEpAH3N2PxNwBervZHPZX2iVVnFJCV-7IMek