Govt sets 5% target to include more Māori business contracts

The Government plans to provide more opportunities for Māori businesses to apply for government contracts, thanks to a move to 'increase supplier diversity' and create wider benefits from the economic recovery.

Minister for Māori Development Willie Jackson and Economic and Regional Development Minister Stuart Nash created a five percent target, which means that at least five percent of its contracts will be awarded to Māori businesses.

"The government spends $42 billion a year on procurement of goods and services. We are looking for more ways to use this buying power to accelerate the economic recovery for Māori businesses," says Jackson.

He believes that the five percent target encourages a more inclusive and prosperous society, and it also supports many small businesses that may be struggling after COVID-19.

What's more, the target encourages government agencies to use their buying power to support social and economic value.

Jackson says the target also honours one of the Labour Party's election manifestos: Better supporting whānau Māori enterprises.

"Indigenous procurement is already successful internationally. In Australia the targets resulted in contracts with Aboriginal and Torres Strait Islander businesses increasing from $6 million to almost $2 billion in just four years," he adds.

"This approach will support Māori businesses to participate in our economic recovery as we build back better.

Mr Nash adds that the Government quickly supported small businesses during the pandemic.

"This new target for government procurement will further improve cash flow to Māori businesses. It also helps diversify the customer base for Māori businesses and build more resilience into Māori economic activity.

He cites benefits including greater employment and training opportunities, business growth, and economic resilience.

"Māori businesses have a strong presence in the primary sector and tourism, in accommodation and the food industry, the retail sector and in the trades," continues Nash.

2019 data from Statistics New Zealand found that there were almost 500 Māori small to medium enterprises (SMEs) with fewer than 100 employees, of which 13% operated in the manufacturing sector.  On average, each Māori SME employed 20 people.

These Māori SMEs exported $202 million, or which 25% ($48 million) went to Australia.

Speaking further about the five percent government contract target, Nash says, "This policy has the potential to further assist with kick-starting of economic activity into other sectors.