Ongoing growth in the number of Indigenous Australians in business
Centre fo
Aboriginal Economic
Policy Research
ANU College of
Arts & Social
Sciences CAEPR WORKING PAPER 125/2018
O N G O I N G G R O W T H I N T H E N U M B E R
O F I N D I G E N O U S A U S T R A L I A N S I N
B U S I N E S S
S SHIRODKAR, B HUNTER AND D FOLEY
Series note
The Centre for Aboriginal Economic Policy Research (CAEPR)
undertakes high-quality, independent research to further the social
and economic development and empowerment of Indigenous people
throughout Australia.
For more than 25 years, CAEPR has aimed to combine academic and
teaching excellence on Indigenous economic and social development
and public policy with realism, objectivity and relevance.
CAEPR maintains a substantial publications program, including
Research Monographs, Discussion Papers, Working Papers and Topical
Issues.
The CAEPR Working Paper series exists to disseminate preliminary
esearch findings, to share ideas about a topic, or to elicit discussion
and feedback. All Working Papers are subject to internal peer review.
All CAEPR publications are available in electronic format for free
download from CAEPR’s website:
caepr.cass.anu.edu.au
CAEPR is located within the Research School of Social Sciences in the
College of Arts & Social Sciences at the Australian National University
(ANU). The Centre is funded from a range of sources, including ANU,
the Australian Research Council, industry and philanthropic partners,
and Australian state and te
itory governments.
As with all CAEPR publications, the views expressed in this Working
Paper are those of the author(s) and do not reflect any official CAEPR
position.
Dr Janet Hunt
Interim Director, CAEPR
Research School of Social Sciences
College of Arts & Social Sciences
The Australian National University
October 2018
http:
caepr.cass.anu.edu.au
caepr.cass.anu.edu.au
CAEPR LINKS
Click here to open
ookmarks, and to access
quick links to the CAEPR
website, including:
• Discussion Papers
• Working Papers
• Research Monographs
• Topical Issues
• Census Papers
Ongoing growth in the
number of Indigenous
Australians in business
S Shirodkar, B Hunter and D Foley
Siddharth Shirodkar is a Sir Roland Wilson Scholarship holder at the
Centre for Aboriginal Economic Policy Research (CAEPR), Research School
of Social Sciences, College of Arts & Social Sciences, Australian National
University. Boyd Hunter is a Senior Fellow at CAEPR. Dennis Foley is a
Professor of Entrepreneurship at the University of Canbe
a.
Working Paper No. 125/2018 iii
Abstract
In 2014, Boyd Hunter attempted to provide a consistent estimate
of the growth in Indigenous self-employment between 1991
and 2011. Changes in the census questionnaire structure and
sequencing means that projecting the growth trends back to
1991 is now problematic. This paper provides a more refined,
consistent and transparent method for calculating the number
of Indigenous owner–managers, including accounting for the
growing prevalence of Indigenous owner–managers who are
increasingly identifying themselves as Indigenous in the census,
unlike in previous censuses where many did not identify. Using
census data and estimated residential population statistics, we
conservatively estimate that around XXXXXXXXXXIndigenous business
owner–managers operated in Australia in 2016. We estimate that
the number of Indigenous business owner–managers grew by
30% between 2011 and 2016. The rate of Indigenous business
ownership has grown marginally as a share of the Indigenous
working-age population at a time when the non-Indigenous rate
of business ownership has fallen. Yet the rate of Indigenous
usiness ownership remains relatively low compared with the rate
of business ownership among non-Indigenous Australians. The
paper also provides insights about the characteristics of Indigenous
owner–managers, including their number, geographic distribution,
gender composition, industrial sectors, and whether they are
unning incorporated or unincorporated enterprises. The recent
growth in Indigenous owner–managers is almost entirely in u
an
areas and cities where well-developed and diverse labour and
Working Paper No.125/2018
ISSN XXXXXXXXXX
ISBN XXXXXXXXXX
An electronic publication downloaded
from
.
For a complete list of CAEPR
Working Papers, see
caepr.cass.anu.edu.au
esearch
publications/working-papers>.
Centre for Aboriginal Economic
Policy Research
Research School of Social Sciences
College of Arts & Social Sciences
The Australian National University
Front cover image:
Te
y Ngamanda
a Wilson, Gulach
(detail), painting on bark, private
collection © Te
y Ngamanda
a,
licensed by Viscopy, 2016
DOI: XXXXXXXXXX/5bdbce256fae4
http:
caepr.cass.anu.edu.au
http:
caepr.cass.anu.edu.au
http:
caepr.cass.anu.edu.au
esearch/publications/working-papers
http:
caepr.cass.anu.edu.au
esearch/publications/working-papers
https:
openresearch-repository.anu.edu.au/handle/1885/148675
iv Shirodkar, Hunter and Foley
Centre for Aboriginal Economic Policy Research
Acronyms
ABS Australian Bureau of Statistics
ACLD Australian Census Longitudinal Dataset
ANU Australian National University
CAEPR Centre for Aboriginal Economic Policy Research
CEO chief executive office
ERP estimated residential population
IPP Indigenous Procurement Policy
Acknowledgments
The authors thank two anonymous referees for comments received
on an earlier draft of this paper, as well as participants at a seminar
presentation to the Department of the Prime Minister and Cabinet
(PM&C) held in Canbe
a in September 2017. The findings and views
eported in this paper, however, are those of the authors and should not
e attributed to PM&C.
product markets operate. The paper explores some of the key factors
that are impacting on Indigenous business development, including
issues about the economics of discrimination and remoteness. The
paper also outlines policy implications that arise from the analysis. We
eflect on further refinements of the Indigenous Procurement Policy, the
ecently announced Indigenous Business Sector Strategy and other
policy options.
Keywords: Indigenous businesses, Indigenous owner–managers,
Indigenous entrepreneurship, economics of discrimination, remote
Indigenous business
caepr.cass.anu.edu.au
Contents
Series note ii
Abstract iii
Acknowledgments iv
Acronyms iv
1 Introduction 1
2 The growing prevalence of Indigenous Australians in business 2
3 Identifying recent trends in Indigenous business owner–managers 4
4 Distribution of Indigenous owner–managers in the census 7
5 Explaining the low rates of Indigenous business ownership in Australia 13
6 Discussion and policy implications 16
Appendix A Calculating the number of Indigenous business owner–managers 18
Appendix B Census household form questions 21
Notes 24
References 24
Working Paper No. 125/2018 v
http:
caepr.cass.anu.edu.au
vi Shirodkar, Hunter and Foley
Centre for Aboriginal Economic Policy Research
Tables and figures
Figure 1 Growth in the number of Indigenous owner–managers in Australia, 2006–16 4
Figure 2 Rates of Indigenous and non-Indigenous business ownership, 2006–16 5
Table 1 Location of Indigenous owner–managers by Greater Capital City Statistical Area 7
Figure 3 Owner–managers as a percentage of the Indigenous working-age population
(15–64 years), XXXXXXXXXX
Figure 4 Percentage changes in the numbers of Indigenous owner–managers, 2011–16 9
Figure 5 Indigenous owner–managers, by gender, XXXXXXXXXX
Figure 6 Non-Indigenous owner–managers, by gender, XXXXXXXXXX
Figure 7 Indigenous and non-Indigenous business owner age profiles, XXXXXXXXXX
Figure 8 Industry composition of Indigenous and non-Indigenous owner–managers, XXXXXXXXXX
Table 2 Characteristics of enterprises by Indigenous status, XXXXXXXXXX
Table A.1 Changes to identification of Indigenous status across the ACLD 19
Figure B XXXXXXXXXXCensus household form question 33 22
Figure B XXXXXXXXXXCensus household form questions 35–37 22
Figure B XXXXXXXXXXCensus household form questions 35–37 23
Figure B XXXXXXXXXXCensus household form questions 35–37 23
1 Introduction
Indigenous businesses are crucial for the economic
self-determination of First Nations communities. As part
of the process, it is important to improve Australia’s
oader understanding of the sector and chart its
growth. The recent growth in awareness of Indigenous
usiness has created significant interest in good
estimates for the size of the sector. Understanding
the basic characteristics of such businesses and the
composition of the sector offers important information
for policy makers. This paper provides reliable estimates
of the sector, based on detailed analysis of recent
census data as well as compositional facts.
Historically, inadequate data and relatively small
numbers captured in previous censuses has limited
the analysis of Indigenous businesses (Hunter 1999).
The information has improved with the collection of
consistent data in recent censuses, albeit indirect
information based on individuals who own or manage
an enterprise. Of course, not all businesses have a
single owner who also happens to be manager. Many
usinesses are complex legal and tax entities that are
difficult to identify and even more difficult to analyse.
And a number of entrepreneurs own multiple businesses
at the same time, or have owned multiple businesses
over their lifetime.
Unsurprisingly, definitional differences arise. Foley
(2013) argues that the overall number of Aboriginal
and To
es Strait Islander businesses is unnecessarily
estricted by official statistics that focus on majority
Indigenous ownership (i.e. more than 50% of the equity
in the business is controlled by Indigenous people).
His research documents how large numbers of First
Australians are in partnership with non-Indigenous
people, with a substantial number of these business
partnerships involving a ma
ied couple. We have
no evidence to suggest that such businesses are
Indigenous in name only. Many such businesses clearly
involve substantial Indigenous control (also see Foley
& Hunter XXXXXXXXXXThe above illustrates the complexity of
trying to untangle these economic entities. Therefore,
ather than focusing on the business entity, the
thought-provoking and arguably more practical area of
enquiry is in understanding the Indigenous business
owners themselves.
Hunter XXXXXXXXXXattempted to provide a
oad
ush
estimate of the growth in Indigenous self-employment,
which he claims has been growing steadily since the
1991 Census, albeit from a low base. The major issue in
previous estimates of the Indigenous business sector is
an element of confusion as to what constitutes self-
employment, how it relates to businesses and how to
measure it in the data. The 1991 Census asked whether
espondents were self-employed rather than working in
usiness per se. Recent censuses have asked whether
an individual is the owner–manager of an enterprise
(including incorporated or unincorporated enterprises).
Using the census definition given by the Australian
Bureau of Statistics (ABS), this paper provides a
more refined, consistent and transparent method for
attempting to estimate the real number of Indigenous
usiness owner–managers in Australia.
Section 2 documents the policy context for the
Indigenous business sector. We then discuss important
differences between Indigenous businesses, Indigenous
entrepreneurs and Indigenous owner–managers. Some
definitional compromises are required to measure
practically the growing prevalence of Indigenous
usiness owners.
One of the major contributions of this paper is providing
a method to estimate a realistic approximation of the
number of Indigenous business owner–managers in
Australia over the decade to 2016 (Section 3). Crucially,
the method attempts to account for a phenomenon
observed in the data in which a substantial and growing
share of the Indigenous business population has not
identified their Indigenous status in earlier censuses but
has done so in subsequent censuses. The calculation
also adjusts for the Indigenous population undercount
in the census – that is, the roughly 20% of Indigenous
Australians who were not captured in the census (see
Box 1 and Appendix A for details on the methodology).
In Section 4, the paper describes salient characteristics
of Indigenous owner–managers, including where they
are located, which regions have experienced the highest
ates of growth, and the distribution of owner–managers
y industry, gender, demography and types of business.
Section 5 explores the contributing factors that impact
negatively on Indigenous business development,
including unpacking the literature about the economics
of discrimination and examining the increased
challenges for remote-based Indigenous businesses.
The final section (Section 6) reflects on the policy
implications of the findings.
caepr.cass.anu.edu.au
Working Paper No. 125/2018 1
http:
caepr.cass.anu.edu.au
2 The growing prevalence of
Indigenous Australians in
usiness
The historical exclusion of Indigenous Australians from
mainstream economic life has led to low accumulation
of wealth across many Indigenous communities. Only
a relative few gained formal business experience
efore the last decade. The result is that the vast bulk
of entrepreneurially inclined Indigenous Australians
likely lack the key preconditions to start a business
and prosper in our capitalist economy. Despite the
challenging environment, the number of Indigenous
Australians in business (or self-employment) has grown
substantially in recent decades (Hunter XXXXXXXXXXRecent
efforts to highlight the successes of Indigenous-owned
usinesses have raised the national profile of the rapidly
growing sector.
The sector’s recent growth (or, at the very least,
growth in the mainstream awareness of the sector)
is, in part, attributable to initiatives such as the
Indigenous Procurement Policy (IPP), which established
department-level targets for Australian Government
procurement in 2015. Under the IPP, the dollar value
of successful tenders for Australian Government
contracts by Indigenous business owners grew from an
estimated $6 million in 2012–13 to more than $1 billion
in the policy’s first two and a half years (July 2015 to
December XXXXXXXXXXCu
ently, more than 1000Â Indigenous