So one would think that there would be a standard definition of what is an Indigenous business. Well unfortunately there is no single definition in Australia that is legislated as to what defines an Indigenous business. This creates much confusion for those wanting to seek out an Indigenous business as a supplier or to meet their contractual requirements such as under the Indigenous Opportunity Policy (IOP).
So before we go any further lets first clarify the definition of an ‘Indigenous’ person. Australia considers an Indigenous Australian to be someone who is
- Aboriginal; and or
- Torres Strait Islander
- South Sea Islanders are not Indigenous by definition but their history in Australia is not a positive one.
So what defines an Aboriginal or Torres Strait Islander person? We will use the Australian Bureau of Statistics definition adopted from Australian legislation. I have highlighted the key words
- a person of Aboriginal or Torres Strait Islander descent,
- who identifies as being of Aboriginal or Torres Strait Islander origin and
- who is accepted as such by the community with which the person associates”.
So lets begin with the first definition that was around with Indigenous Business Australia (IBA). IBA has the following criteria for a business to be identified as being an Indigenous business.
- at least one applicant must be of Aboriginal and/or Torres Strait Islander descent
- at least 50 per cent of the ownership of your business must be by a person(s) of Aboriginal and/or Torres Strait Islander descent.
Okay, so IBA, a Federal Government agency, uses the definition that an Indigenous business is at least 50% owned.
We now go to Supply Nation, who provides ‘certification’ for being an Indigenous business. There definition is as follows to be a certified supplier or Indigenous business
- 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).
- For profit – the company is able to distribute its equity to members.
- *Trading as a business – with a minimum annual revenue of $50,000.00 and a demonstrated recent history of trade (ideally, at least 6 months trade history).
*If your business has low turnover (less than $50k) or is a start up (no trade history), then please refer to the Emerging Supplier section.
- Business is located in Australia
So Supply Nation uses the definition as being at least 51% owned. This is important to know as Supply Nation (formerly known as Australian Indigenous Minority Suppliers Council (AIMSC)) is listed in the Indigenous Opportunity Policy as a reference point for Indigenous business.
So who else has a definition? Well the Queensland Government has its Black Business Finder (BBF) which is used by the Industry Capability Network (ICN) for contractors to source Indigenous businesses for major contracts. Note, that in order to be eligible to tender and work on these major projects, you have to be registered with ICN. So, Indigenous businesses are required to be listed for identification on the BBF. So BBF has for its definition
“Businesses defined as an Indigenous business are:
- a majority-owned Indigenous business.
- a 50% owned Indigenous business.
A non-Indigenous business that employees at least 75% of Aboriginal or Torres Strait Islander workers is eligible to register on Black Business Finder.”
Confused yet?! The Black Business Finder, which is required to be used by major contractors to source Indigenous businesses includes in its listings businesses that have 75% Aboriginal and or Torres Strait Islander workers. Do we need to go further as to what the definition of “75% workers” is? Does it mean 75% of the workforce? 75% of total wages? 75% wages/workers for the year? 75% of the wages/workers for the project life? This begins to create more questions then it answers. It is especially confusing for a company contractually bound by the IOP to source Indigenous businesses and they are required to use this register, yet they are not assured by the register the business meets the IOP requirements.
So are only government organisations limited to having different definitions? The short answer is no!
At the time of writing I am unable to find the membership application for Aboriginal Enterprise in Mining, Energy and Exploration (AEMEE) to locate their definition. But their historic position on being an Indigenous business was that if you say you are an Indigenous business, then you are accepted to be so.
Pilbarra Aboriginal Contractors Association (PACA) in their Review of Contractual Arrangements Between Australian Aboriginal Enterprises and the Resource Industry (2010) identified 25% ownership as their definition of being an Indigenous business.
In conclusion, there needs to be a single legislated definition of an Indigenous business. I sympathise with those organisations that are seeking Indigenous businesses but have to battle with this definition. In my opinion in a professional capacity, I see the definition of 50% Indigenous owned as being the best step forward. I see this as the opportunity for Indigenous business to grow through 50/50 joint ventures or partnerships. Think of the number of husband and wife partnership businesses where one is non Indigenous. Once there is an adequate and stable supply of Indigenous business that meet the requirements of capability and capacity to service corporate and government procurement, then there can be a transition to the 51% definition.
The employment percentage, to me, does not stand as an adequate definition as this is subjective and can be easily manipulated. If we used the definition of whether a company in Australia was an Australian business using the employee as a definition, then the majority of companies owned by overseas owners would be classified as being Australian owned because they employ Australian workers. Ownership is shareholding, not employment.
Please note I use organisations and their definitions as examples of where there is no consistency in defining an Indigenous business. At the time of writing, I myself am a member and Director of the South East Queensland Indigenous Chamber of Commerce (SEQICC) that uses the Supply Nation definition of 51%, but also a member and President of the Indigenous Construction Group Australia (ICGA) that uses the Indigenous Business Australia definition of 50%. When I am asked what is the definition of an Indigenous business, what would be my answer?
*UPDATE: On the 31st July 2014 the “Forrest Review” by Andrew ‘Twiggy’ Forrest on Indigenous Employment and Training was made public. As part of this, the review identified the significance of Indigenous business in contributing to employment outcomes and economic development. As part of the recommendation, the review gave the following part of its criteria for an Indigenous business for the purposes of being eligible for tax free status as being ‘…. At least 25% Indigenous ownership and board membership….’.