Kinaway Position Statement:

At the recent Victorian Secretaries Board meeting, it was agreed that the measurement for the Victorian Government 1% procurement from Victorian Aboriginal businesses would be expanded to include procurement from both Victorian Aboriginal Community Controlled Organisations (ACCOs) and Victorian Traditional Owner Corporations (TOCs).

The Board of Kinaway Chamber of Commerce representing the interests of over 100 Indigenous businesses in the State strongly opposes this decision.

Kinaway believes there is an important distinction between the categories of for-profit businesses managed by Indigenous entrepreneurs and Aboriginal Community Controlled Organisations.

Whilst Kinaway recognises both categories are important to addressing broad social objectives including economic participation; the underpinning commercial motivations which saw the Victorian Secretaries Board change the procurement targets to include Aboriginal Community Controlled Organisations and Traditional Owner groups sets a national precedent with worrying consequences for Indigenous small business owners operating in the State and elsewhere.

We believe the inclusion of ACCOs and TO groups in the State procurement targets is lazy policy making, driven by a need to demonstrate State adherence to national benchmarks with little thought to the consequences for an emerging Indigenous business sector. We call on Victorian public servants to be policy entrepreneurs and to fully engage the Kinaway membership in discussions on how to achieve outcomes across the State.

Kinaway urges the Victorian Secretaries Board to rescind this decision and engage Indigenous business owners, including Board members of Kinaway in a process to design an Indigenous procurement policy which serves the interests of our community and our business sector.

We believe that Victorian Secretaries Board should be creating an enabling policy and agreement making environment to support for-profit Indigenous businesses rather than changing the procurement targets for reasons of bureaucratic convenience.

Rather, we urge the Victorian Secretaries Board to address current impediments which both stop the State Government achieving its procurement targets and act as obstacles to Indigenous entrepreneurialism. For many Indigenous business owners, the policy and programming environment remains complex and challenging. For example:
Business funding opportunities are managed through multiple departments which retain financial authority over business development;
The methods of engagement in public service settings is more geared toward community controlled and not-for-profits.
Policy entrepreneurs are needed across all departments to match the skills and expertise of business owners. This is a new field of practice, not taught, not well understood but necessary to accommodate the innovation our businesses bring to the table.

There is currently no consistency in the training of departmental procurement officers nor in the ways these officers engage with Indigenous business owners. The feedback from business owners is that they are receiving intermittent contracts through stop-start procurement processes and lots of ‘one offs’ which makes taking business to scale difficult;
Vendor Panel remains largely inaccessible to a large number of our members in the State making this an ineffective engagement tool for Indigenous businesses;
Indigenous businesses are subject to changing State Government program priorities, and are negatively impacted on by inflexible (payment) conditions and timeframes; and
Upon winning government contracts, Indigenous businesses are often overloaded with heavy administrative and ‘upward’ accountability burdens.

Kinaway believes there is a misapplication of the principles of ‘equality’ and ‘equity’ in the decision to include government funded Aboriginal Community Controlled Organisations and Traditional Owner groups in the procurement targets.

The decision taken by the Secretaries Group seems to confuse ‘equality’ and ‘equity’. This is because Indigenous entrepreneurs are not able to be competitive against government funded organisations; many of whom partner with non-Indigenous agencies, the University sector or who employ business unit managers with skills to write tenders and grant applications.

Effort needs to be targeted toward supporting the growth of Indigenous businesses into a vibrant business sector. Without this equity lens, Indigenous business owners feel the flow on effects from this decision will negatively impact our own and our family’s participation in the local and global economy. This is the antithesis of what we set out to achieve.

The Victorian Secretaries Group should meet with Kinaway as soon as possible to explain the process they went through to arrive at this decision. In the spirit of transparency; we want to see evidence of the following:

A break down on what the Government spends on for-profit Indigenous businesses as opposed to the spend on Aboriginal Community Controlled Organisations and Traditional Owner Corporations.

What advice the Victorian Secretaries Group sought and received from the Office of the Registrar of Aboriginal Corporations to ensure they are not setting a national precedent or unfairly setting organisations up to fail considering their legal, corporate and other registrar related responsibilities. There are considerable constitutional issues that need to be addressed with the inclusion of Indigenous community-controlled organisations in a for-profit business funding pool.

That the core funding provided to Aboriginal Community Controlled Organisations and Traditional Owner Groups is sufficient to ensure long term sustainability, and that the procurement funds are not being applied to this category of organisation to reduce the responsibility of State government investment in a vibrant community-controlled sector.

That the Victorian Secretaries Board have considered the following governance-related questions in their deliberations:

Can community-controlled organisations be guaranteed core funding if they access funds for business procurement targets?
Are community-controlled organisations going to have support from government to realise the governance arrangements of managing two separate though related entities?
Are the constitutions of these organisations sufficient to protect them from business risks that arise from participating in the economy as a business?
Are members of this sector compelled to have shareholders and/or licencing arrangements, and if so, how are profits to be distributed without compromising their ability to provide services to members of our community?
Are Aboriginal community-controlled organisations now required to have business owners and operators on their Boards? What does this mean for community control and self determination? We understand there is another policy drive to consider defining an Aboriginal organisation as being 51% controlled by Aboriginal people, but does this change now that we are including them in the for-profit categories of procurement? What now constitutes an Aboriginal organisational board as a result of this decision?
Will community enterprise Directors have different obligations if organisations turn a profit or loss? How will profits be distributed? To their members?
Further clarification from the Victorian Secretaries Group that with the inclusion of community-controlled organisations in the procurement targets that these organisations now have access to government grants and business loans. Can government grants be used to pay for loans? Can Indigenous businesses now apply for and receive government grants to pay for loans?
Whether the inclusion of community-controlled organisations in the procurement policy will lead to a user-pays model for services in which members of our community will have to pay for services that are currently offered for free or low cost. We do not want vulnerable members of our families to miss out on services because they have to pay. Payment for services is implicit in establishing an enterprise, and we don’t want our community people to suffer as a result.
That we are not moving to a ‘for profit’ model for prison services, out of home care arrangements, and other social services as a result of this ruling? What are the activities that the community-controlled sector can provide to our own and other members of the community?
That our family members employed in these community-controlled organisations will continue to be able to benefit from salary sacrificing arrangements that come with working in a community-controlled organisation with a DGR status, and that our organisations are going to be able to keep their DGR status, and
Indigenous businesses are a legitimate vehicle for the employment of family members and close relations. Community-controlled organisations have been plagued by calls of nepotism in the past. Have the Secretaries group established a position on the issue of family employment through businesses and community enterprises?

Kinaway members need to know if we will now be eligible for taxation benefits, government grants and being able access a DGR status, in the way that other organisations who are now included in the procurement targets are. This would be an appropriate outcome in an equality and equity-based approach to the decision taken to include Aboriginal Community Controlled Organisations and Traditional Owner groups in the Procurement targets.

Recommendations:
Kinaway Directors meet with the Secretaries Board to discuss these and other matters relating to Indigenous procurement in the State.

That the Secretaries Board rescind the decision to include Aboriginal organisations in current procurement targets pending this discussion.

The Secretaries Board answer the questions contained in this statement as soon as practical.

The Secretaries Board consider equity, not equality principles and either extend the current benefits that are enjoyed by the community-controlled sector to Indigenous for-profit businesses or establish a separate category for community-controlled organisations separate to for-profit Indigenous businesses and maintain the same level of funding commitments to each category.

See Attached Media Statement Embargoed until 9th August, 2019.