How social procurement can address inequities in Aotearoa
Exploring social procurement policy as a tool to improve social and economic outcomes for all.
Aotearoa’s team of 5 million has overcome the immediate health crisis posed by COVID-19. Our collective attention is now split between maintaining our Level One status and working out how to thrive in our new economic reality.
Māori and Pacific people have historically been more heavily impacted than other communities during economic recessions. Māori are a growing and predominantly youthful population with over 50% being 25 years old or younger.1 For many young Māori who are working age adults, this will be their first economic recession. Pre-COVID-19, national debt was forecast to reach NZ$76 billion by 2024. Now it is forecast to hit $200 billion.2 The debt being incurred to stimulate our economy will be paid off by this same generation of young Māori.
In many ways our future national success will depend on the ability of government to ensure rangatahi Māori gain and retain employment.3 This will require an approach that produces equitable outcomes, which will in turn protect and foster opportunities to grow Māori employment and business.
Some might call this a Treaty-based or social impact approach to our economic recovery – and one viable way to realise this opportunity comes in the form of social procurement.
Learning from the Australian Indigenous Procurement Policy
One international example of social procurement is the Australian Indigenous Procurement Policy (IPP), which has made a significant positive impact for indigenous Australians. Last year, Deloitte Australia undertook an independent evaluation of the IPP on behalf of the National Indigenous Australians Agency.4 The policy targets for 2019-20 were for 3% of the total number of government contracts to be awarded to indigenous businesses, along with 1% of the total value of those contracts. The initiative is showing progress - from 2015 to 2019, 5% of the total number of contracts, and 1% of the total value of the contracts were awarded to indigenous business. This equated to AUD$1.5 billion into the indigenous economy.
Deloitte Australia confirmed that the policy was successful in increasing the rate of government purchasing from indigenous businesses across the Tasman, leading to increased business, employment opportunities, innovation and improved economic outcomes for indigenous Australians.
What our social procurement policy could look like
In New Zealand, the government spends approximately $41 billion a year on procurement, amounting to around 18% of GDP.5 In order to achieve positive outcomes for Māori the principles of good policy making should be applied. Specifically providing clear outcomes, measurements and monitoring.
In addition to increasing the number of jobs for Māori people, an indigenous procurement policy might also create a Māori employment updraft helping Māori to attain more highly paid and senior roles in the job market. Social procurement would also naturally support the development of Māori businesses as more targeted opportunities arise to tender for government contracts.
Some entities are already adopting social procurement practices. Both Rotorua Lakes and Auckland Councils have implemented tangata whenua orientated procurement approaches. This includes the RFP proposal process for the wastewater treatment plant in Rotorua and the South Auckland-based He Waka Eke Noa programme.
In addition, recent changes to the Government Rules of Sourcing require Agencies to consider broader outcomes, in line with the Labour government’s focus on wellbeing, which are also supportive of social procurement.
If we want to stand up a similar approach to Australia here in Aotearoa and stimulate Māori economic development, we need to learn from the architecture and implementation lessons of the Indigenous Procurement Policy in Australia.
The key takeaways from Australia are:
- Establishing an independent body that can verify whether an entity is or is not a “Māori business”.
- Providing for ‘value’ as well as ‘volume’ based targets
- Strengthening both sides of the procurement equation to ensure Māori entities are ready to respond to tenders and the public sector is writing tenders in a way that enables Māori businesses to participate.
- Building a Māori supply market that can participate further down the value chain will take time and an independent body will be essential to support this execution and provide clarity and guidance.
While the social and economic inequities faced by Māori are widely recognised, the social and economic cost these impose on the broader New Zealand economy is often overlooked. Seeking to lift wellbeing outcomes for Māori through investing in a thriving Māori economy will offer broad social and economic benefits for New Zealand as whole, while helping to build resilient Māori communities.
New Zealand is an innovative and world-leading country; reinforced by our approach to COVID-19 and our Māori-Crown partnerships. The unprecedented economic challenges ahead of us will require bold policy approaches that empower Māori businesses and communities. Indigenous procurement offers an innovative opportunity to support better economic and social outcomes for all of Aotearoa.
Hourua Pae Rau
Hourua Pae Rau is Deloitte’s Māori sector team. The name literally translates as ‘a double-hulled waka of a hundred horizons’. It serves as a metaphor to describe how we partner with our clients to form a double-hull waka that enables us to navigate the ocean of choice and arrive at the right destination.
Our team is dedicated to partnering with Māori, government and businesses wishing to align their work with improving outcomes for Māori.
Hourua Pae Rau represents the largest Māori professional services team in Aotearoa, with the depth of expertise, experience and relationships to make an impact that matters.
1. StatsNZ (2018). 2018 Census population and dwelling counts. https://www.stats.govt.nz/information-releases/2018-census-population-and dwelling-counts
2. Reuters (2020). New Zealand unveils record spending to stop massive job losses. https://www.reuters.com/article/us-newzealand-economy-budget/new-zealand-unveils-record-spending-to-stop-massive-job-losses-idUSKBN22Q06T
3. BERL (2020). Ka whati te tai: a generation disrupted. https://berl.co.nz/sites/default/files/2020-06/Tokona%20Te%20Raki%20-%20Ka%20whati%20te%20tai%20-%20Final.pdf
4. Commonwealth of Australia, Department of the Prime Minister and Cabinet (2019). Third Year Evaluation of the Indigenous Procurement Policy. https://www.niaa.gov.au/sites/default/files/publications/third-year-evaluation-indigenous-procurement-policy.pdf
5. New Zealand Government Procurement (2020). About us.