The power of the Indigenous business sector

Each Year, Indigenous businesses bring in at least $A16.1 billion – highlighting the extent of the economic power and diversity of the Australian Indigenous business sector

Annually, Indigenous businesses in Australia bring in a total of at least $AU16.1 billion – an output equivalent to the country’s timber industry – and that doesn’t take into account the additional significant economic, social and cultural benefits.

While there has been relatively little insight into this sector, research is revealing the importance of Indigenous business to the Australian economy and to communities across the country.

Indigenous business at work

Identifying and analysing Indigenous businesses from national data sources is challenging, with no Indigenous identifier available for Indigenous business owners to select when registering their businesses.

This data blind spot has meant rigorous, evidence-based measurement of Indigenous businesses’ contribution in Australia has been almost impossible.

The result? The decision-making environment for Indigenous business sector policy and program development is restricted by limited data, best practice examples and information pertaining to general business policy data.

To rectify this, since 2018, a team at the University of Melbourne has developed and maintained a longitudinal dataset of Indigenous businesses to track the sector’s development over time – an initiative called the Indigenous Economic Power Project (IEPP).

The IEPP produces an annual Indigenous Business and Corporation Snapshot Study – a statistical resource with business activity, tax and payroll information on Australian businesses unlocks insights on business and industry dynamics, but with identifiers of Indigenous businesses.

The latest Snapshot Study 4.0 provides an unprecedented summary of the latest developments in the Indigenous business sector. It proves the economic power of Indigenous business in this country and dismisses the many stereotypes and myths that have, for decades, have led to lost opportunities for Indigenous business growth.

Economic drivers and employment opportunities

We have found some extraordinary results.

The Indigenous business sector is vital in employing Indigenous people – 1 in 3 employees in the sector are Indigenous – that 46,718 out of 135,733 employees. This compares to 1 in 36 people outside the Indigenous business ecosystem. So Indigenous businesses employ Indigenous people at 12 times the rate of the non-Indigenous sector.

Many Indigenous people want to live and work on Country and our research shows that 65% of Indigenous jobs in Indigenous businesses are in rural and remote areas of Australia.

Indigenous businesses also provide more supportive environments for Indigenous employees – they are more likely to be in management or supervisory positions and hold a professional role – 33% are managers or professionals compared to 16% in non-Indigenous businesses.

Higher skills and higher wages

This doesn’t reflect levels of formal education but more the fact that Indigenous employees’ skills and expertise are better-appreciated within Indigenous businesses.

Because these employees perform higher-skilled jobs, they are paid higher wages and are more likely to be employed full-time. Employers in the Indigenous business and corporation ecosystem pay Indigenous workers around 7% more on average.

Data from Snapshot Study 4.0 clearly indicates that Indigenous employees tend to do better when they are matched with Indigenous-owned businesses.

Melbourne Professional Education at the University of Melbourne has created a series of cultural and ethical micro-credential programs for professionals to support businesses to quickly upskill and develop new capabilities. Led by industry experts, the programs cover areas such as the Sharing of Indigenous Knowledges, Indigenous Cultural and Creative IP, Indigenous Community Research and Acknowledgement of Country.

Improving the data

However, future work is needed to continue to improve data within the Indigenous Economic Power Project. There is still a risk that small Indigenous businesses may be under-represented in the data and it is often the invisible pockets of the community – small businesses and start-ups – that need special attention from policy.

The Australian Business Register could include an opportunity for new businesses to indicate they are Indigenous-owned and operated when they register via a simple tick box.

We need to improve the coverage of Indigenous business registries, for example, including registries from state-based Indigenous chambers of commerce, and the representation of Indigenous businesses in the registries.

We could extend the coverage of information in the IEPP to capture policy impacts, like government and corporate procurement data, as well as measures that capture flow-on benefits to the community e.g. education and training participation, financial independence and health.

This is a big undertaking that involves support from existing and new data custodians – including all levels of government and corporate partners and Indigenous businesses. While it may be a significant undertaking, it’s not an impossible one.

The Dilin Duwa Centre for Indigenous Business Leadership at the University of Melbourne offers a Master of Indigenous Business Leadership. The program, the first of its kind in Australia, is an all-Indigenous taught and developed curriculum that equips Indigenous leaders with the specific skills needed to navigate complex global economies while staying deeply rooted in cultural identity.

Melbourne Professional Education at the University of Melbourne has also created a series of micro-credential programs for professionals that cover areas such as the Sharing of Indigenous Knowledges, Indigenous Cultural and Creative IP, Indigenous Community Research and Acknowledgement of Country.

Together, we can help shape the future of the Indigenous business sector.

Professor Michelle Evans, Director, Dilin Duwa Centre for Indigenous Business Leadership; Professor, Leadership, Faculty of Business and Economics, University of Melbourne.

Associate Professor Cain Polidano, Principal Research Fellow, Melbourne Institute, Applied Economic and Social Research, Faculty of Business and Economics, University of Melbourne.