In late 2020, the Government announced a new policy to provide more opportunities and cashflow to Māori around New Zealand through progressive procurement – a target of 5% of procurement contracts being awarded to Māori businesses by mandated Government agencies.
Announced by Minister for Māori Development, Willie Jackson, and Economic and Regional Development Minister, Stuart Nash, this policy is part of the fulfilment of the Labour party's election manifesto – better supporting whānau Māori enterprises. Māori businesses are generally small to medium sized and many have been involved in industries significantly affected by the economic turmoil from the COVID-19 pandemic, such as accommodation, food services, retail and tourism, which the Government has moved to help bounce back and recover.
The aim of the policy
The policy aims to stimulate the Māori economy and increase diversity in suppliers used by the Government through social procurement, to create social and public value including social, cultural and environmental outcomes, as well as economic opportunities. The new policy seeks to achieve this through:
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increased employment and training opportunities for Māori;
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the incorporation and development of more Māori businesses that can tender for government procurement contracts;
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supporting greater innovation;
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creating more economic activity and opportunities in provincial New Zealand; and
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diversification of the customer base for Māori businesses, leading to more stability and confidence.
The long-term goals are to increase the target level of procurement contracts awarded to Māori businesses and to amend the target to one based on value, rather than volume, of contracts.
The target will be reviewed after the first year, and eventually procurement targets could expand to include all of the national public sector, local government, the private sector and non-profit organisations. There is also potential for social procurement to expand under similar policies to target other diverse groups in New Zealand, such as Pacific peoples, women and differently abled people.
Where things currently stand
Annually, the total value of procurement contracts awarded by the New Zealand Government is around $42 billion. While the aim of this policy regards the number of contracts and not their value, this policy may result in billions of dollars' worth of new contracts for Māori businesses.
Some Government agencies, such as the Department of Internal Affairs, are already working to promote social procurement approaches across local government, and Auckland Council already has a target of 5% of the value of all contracts being awarded to diverse suppliers.
The Government does not intend to make any changes to the Government Procurement Rules (Rules) in order to implement this policy. Under Rule 17 of the Rules, agencies must have regard to guidance published by Ministry for Business, Innovation and Employment (MBIE) on how to effectively involve New Zealand businesses, including Māori businesses, in contract opportunities.
Implementation and engagement with procurement processes
MBIE and Te Puni Kōkiri have developed guidance on implementation of the policy, which you can find here.
To reduce barriers for Māori businesses to engage in government procurement processes, Te Puni Kōkiri's project team, Te Kupenga Hao Pāuaua, is working together with MBIE on development of support and implementation of social procurement practices with various Government agencies.
Te Kupenga Hao Pāuaua will also be working towards development of an intermediary organisation to act as a broker to connect suppliers with buyers, provide support and advocacy for suppliers, and check that businesses engaged fall under the classification of Māori businesses. For the purposes of government procurement, to qualify as a Māori business, entities will have to be:
This aligns with the recent New Zealand Business Number (Māori Entity Identifier) Order 2020, which allows entities to register information about whether they are a Māori entity and the factors supporting this.
Working to connect Māori businesses with agencies seeking bids on procurement contracts and offering business support services for Māori businesses is another important aspect of creating engagement with this policy, and Te Puni Kōkiri will be working towards implementation of similar support here to that seen in Australia (described below).
Looking across the ditch
A similar policy of procurement targets for Aboriginal and Torres Strait Islander businesses in Australia was introduced in 2015, which has resulted in contracts with these businesses rising from AU$6 million in value to almost AU$2 billion. Today, the Australian procurement industry involves hundreds of Aboriginal and Torres Strait Islander businesses annually.
The development of support infrastructure for Aboriginal and Torres Strait Islander businesses means a full suite of business support services is now available for use by indigenous organisations. Through development of databases of Aboriginal and Torres Strait Islander businesses, such as Supply Nation, these support services have assisted in the Australian Government meeting its procurement targets, as they make it easier to locate and engage with indigenous businesses.
Further Government support for the Māori economy recently announced
The Government has also recently announced $1.1 billion in its Budget, mostly aimed at improving housing, health and education outcomes for Māori, including:
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$380m for 1,000 new homes for Māori, repairs to approximately 700 Māori-owned homes and housing support services;
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$242.8m for Māori health initiatives and the new Māori Health Authority;
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$150m in Māori Education including increasing the pay of kōhanga reo kaiako (teachers);
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$42m towards the Māori media sector and programme content;
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$15m for Māori tourism; and
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$14.8m for the implementation of the Māori language strategy.
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