The Importance of Indigenous and Social Procurement Policies

Indigenous procurement plays a crucial role in fostering economic inclusion and driving long-term benefits for Indigenous communities. Through procurement policies and processes that prioritise engagement with Indigenous suppliers, governments and businesses can create economic opportunities that enhance social outcomes, promote cultural preservation, and stimulate community-led growth.

By embedding social procurement principles into public and private sector contracts, both Australia and New Zealand seek to strengthen relationships with Indigenous businesses, encourage supplier diversity, and generate broader societal benefits. However, the two nations take notably different approaches to implementing these initiatives.

Māori Economic Development Initiatives in New Zealand

Unlike Australia, New Zealand does not have a mandated Indigenous procurement policy requiring government agencies to allocate a set percentage of spending to Māori-owned businesses. Instead, the government has introduced an 8% target for the total annual value of government contracts awarded to Māori businesses.

This target, while a step in the right direction, lacks enforcement mechanisms. There is currently no legal requirement to meet the target. Without a mandate, procurement processes are less likely to prioritise Indigenous suppliers, leading to missed opportunities for Māori enterprises to participate in major government contracts.

Australia’s Mandated Indigenous Procurement Policy (IPP)

Australia takes a more structured approach in 2015 with the introduction of the Indigenous Procurement Policy (IPP). This procurement policy mandates set targets for directing government spending towards Indigenous businesses, ensuring that these enterprises have a defined pathway to secure government contracts.

Under the IPP:

• Indigenous businesses must be given a fair opportunity to demonstrate value for money before a general approach to market.
• The Master Service Agreement (MSA) applies to procurements in remote areas and contracts valued between $80,000 and $200,000 (GST inclusive) that are wholly delivered within Australia.
• There are strict annual targets for government agencies to increase their Indigenous procurement spend and improve procurement processes.

This mandated framework fosters accountability and ensures that Indigenous suppliers receive tangible opportunities to participate in Australia’s economic growth.

Key Differences Between Australia and New Zealand’s Approaches

The fundamental difference between these two procurement strategies is mandated spending vs. voluntary targets.

New Zealand’s optional target means that procurement strategies may overlook Māori businesses, unintentionally reinforcing the status quo of working with large, established suppliers. Without clear accountability measures, it becomes easier for agencies to circumvent social procurement objectives.

In contrast, Australia’s Indigenous Procurement Policy mandates procurement engagement, effectively driving real change by requiring organisations to proactively seek out and contract with Indigenous businesses. A mandated approach helps increase supplier diversity, fostering innovation and competition in service delivery.

Final Thoughts: What Can Both Countries Learn from Each Other?

Both Australia and New Zealand recognise the importance of Indigenous procurement in strengthening economic resilience and celebrating cultural heritage. However, their differing approaches impact Indigenous business participation in public contracts.

By making Indigenous procurement policy mandatory, Australia has successfully embedded accountability into its procurement processes, ensuring continuous growth in Indigenous business engagement. Meanwhile, New Zealand’s voluntary approach provides flexibility but lacks the enforcement needed to drive consistent and measurable outcomes.

To make a greater impact in New Zealand, they should increase accountability through stronger social procurement strategies—whether through mandated targets, incentives, or reporting requirements—would help create a more inclusive and diverse procurement landscape.

Both nations are moving in the right direction, but with a more structured approach, New Zealand could unlock greater opportunities for Māori businesses to thrive.