July 3, 2018
By David Brookes – Managing Director, Social Traders
The Federal Government’s Budget pledge to spend $75 billion* on nation-building infrastructure projects over the next decade is a potential game changer for Australia – but not in the way most people think.
Investing in new roads and public transport systems is critical in making Australia even more liveable as the population grows at unprecedented rates. Accordingly, infrastructure and major project funding by most State Governments is also at historically high levels.
This boom represents the greatest opportunity for social change Australia has seen in a very long time. It is a unique opportunity to reduce social inequality by bringing disadvantaged people into the labour market; whether they’re young people at risk, people with a disability, the long term unemployed or recently arrived migrants and refugees.
The means is via social procurement – when organisations choose to purchase a social outcome when they buy goods or services from social enterprises, including indigenous business and disability service organisations. By their nature, these organisations create employment opportunities for marginalised groups and strengthen communities
To deliver these planned nation-building infrastructure works, tens of thousands of contracts will be tendered and submitted by a myriad of suppliers, including large multi-national corporations, small to medium sized businesses and sole traders.
While these contracts will provide employment for hundreds of thousands of working and middle-class Australians, they also represent an incredible opportunity to create large-scale employment for at-risk and disadvantaged Australians.
Yes, workforce participation rates continue to increase, and governments are keen to inform us that jobs are being created. Earlier this year Prime Minister Malcolm Turnbull pointed to 400,000 new jobs created in the year to December 2017. But according to the latest Australian Bureau of Statistics figures 730,000 Australians find themselves without work, with 94,000 unemployed for two years or more.
So, we still have an unemployment problem, whether we like to acknowledge it or not.
Over the past 18 months, Social Traders has seen first-hand the significant difference that private and public sector buyers can make to reducing long-term unemployment challenges through changing procurement policies and practices that gives market access to social enterprise products and services.
We’ve worked with a range of business and government buyers including organisations like John Holland, Coca-Cola Amatil, Laing O’Rourke, Boral, Australia Post, Mirvac and others, who collectively have spent approximately $20 million with social enterprises in the past 18 months, creating more than 300 jobs for marginalised individuals in these states.
We estimate that for every $100,000 spent by business and government buyers on social procurement, 1.5 jobs are created for those suffering or at risk of disadvantage. To give this some perspective, if as little as 3% of the budgeted infrastructure spending goes toward buying from social enterprise, as many as 22,000 jobs for disadvantaged Australians could be created.
What Social Traders is seeing through our network is that social enterprises are winning contracts with large business and government by being competitive on price and quality. By demonstrating that they can deliver the same high-quality product, on time and on budget, they are being integrated into organisational supply chains as part of ongoing business.
A recent example is Yarra View Nursery, a social enterprise in Melbourne’s south-east. Last month they announced the creation of 10 new jobs for people living with intellectual disabilities, thanks to a $500,000 contract with the Victorian Level Crossing Removal Authority and John Holland.
Yarra View is just one of many social enterprises to experience growth and increase employment opportunities as a result of social procurement partnerships from infrastructure spending in Victoria.
In NSW, Mates on the Move – an anti-recidivism and pro-reintegration social enterprise – is currently providing regular recycling collections for Mirvac in the Sydney CBD. Addressing the three major risks factors for recidivism (anti-social attitudes, antisocial associations, lack of soft and hard work skills) Mates on the Move have provided 13 program participants with paid work since January 2017, with five finding work in the mainstream job market.
There is certainly incentive for the commercial sector to invest in social procurement. Rising community expectations are seeing some positive sentiments coming to the fore within Australia’s broader business sector. Earlier this year NAB Chairman Ken Henry AC informed the Australian Institute of Company Directors in Melbourne, “If we in business are going to be taken seriously, we will have to demonstrate that we are engaging not out of self-interest, but because we share a mission to improve the wellbeing of the Australian people.”
The Hayne Royal Commission currently underway is also placing a spotlight on the importance of business acting responsibly, respecting the rights of customers and the values of the community.
As well as generating a positive social or environmental impact, buying from social enterprises and other purpose-led businesses also provides many competitive advantages that include enhanced staff attraction and retention, investor sentiment, customer engagement and brand building.
The Victorian Government is providing policy leadership, having recently launched a Social Procurement Framework requiring all Government departments to have strategies in place to increase their purchasing from social enterprise.
Through the large-scale adoption of social procurement, Australian businesses and governments can create real and sustainable change.
The means is right here, and right now.
* The May Federal budget allocated a further $24 billion to more than the $50 billion already ear-marked for capital expenditure on infrastructure projects.