Their first three criteria for full certification are:
- Ownership – at least 51 per cent ownership of the company by an Indigenous Australian(s).
- Management – the company is led / managed by a Principal Executive Officer who is an Indigenous Australian.
- Control – the key business decisions regarding the company’s finances, operations, personnel and strategy are made by an Indigenous Australian(s).
I am concerned however that given there is no size limitation that this could lead the way to joint ventures with much larger companies that are looking to enter the Indigenous supply chain. The desire to do this is going to be increased due to the change in Federal Government procurement policies from July 1. After this 3% of Federal spending will need to be with Indigenous Businesses who only need to meet the ‘Registered’ criteria.
I have observed and worked with many of these types of Joint Ventures as they are common at mine sites in the Pilbara. Some of the things I have observed (even with 50% ownership) are:
- The Aboriginal participants in the JV rarely have any control over key business decisions
- Management is almost never led by an Indigenous Australian or even shadowing Project Manager positions (to support improving the skills of an Indigenous Australian) is rarely supported
- The Aboriginal participants only benefit if the JV partner actually lets them, as they can manipulate the JV outcomes to whatever they want through management fees.
The Federal Government has implemented a substantial opportunity for Indigenous business to benefit from so that we can get some form of a level playing field but we can’t deny there are opportunists that will take advantage of the loose eligibility criteria, in its current form.