Indigenous Employment and Skills Strategies in Australia

Assessment and recommendations

The context for this OECD report

In some OECD countries, Indigenous people represent an important and growing demographic group with a unique set of cultures and customs. However, many face significant challenges in finding quality employment and economic development opportunities. Well-designed and targeted programmes can assist Indigenous people in developing skills to find long-term employment, while also contributing to broader economic development objectives and inclusive growth.

The primary focus of this report is on challenges and opportunities pertaining to Indigenous Australians living in cities and other urban areas. The work seeks to understand what programmes practices have been successful in closing the gap in employment outcomes. It explores key trends, policies and programmes in the following areas: 1) building the skills of Indigenous Australians; 2) connecting Indigenous Australians to jobs; and 3) fostering Indigenous job creation in urban areas. Drawing on lessons from case study work, the report aims to highlight key programme principles which can inform future policy development in Australia. Throughout this report, the term Indigenous Australians refers to both Aboriginal Peoples and Torres Strait Islander Peoples.

A persistent gap in labour market outcomes between Indigenous and non‑Indigenous Australians

In 2018, Australia’s unemployment rate was 5.2%, which was on par with the overall OECD average. Unemployment has been declining steadily since 2009, when it stood at 8.1%. Youth unemployment stood at 11.8% in 2018, which is down from 16.6% in 2009. While these indicators point to a healthy labour market, they mask some significant labour market challenges facing Indigenous Australians.

In 2016, the labour market participation rate of Indigenous Australians stood at 57.1%, which was significantly below the non-Indigenous Australian rate of 77.0%, a gap that has not improved over the last decade. There is also a gap of 25.2 percentage points when comparing the employment rate of Indigenous and non-Indigenous Australians, which has not improved recently either. Unemployment for Indigenous Australians stood at 18.4% in 2016, which was almost three times the non-Indigenous rate of 6.8%. This unemployment rate gap of 11.6 percentage points has increased from 10.5 percentage points in 2006. The unemployment rate for younger Indigenous Australians (ages 15-24 years) sits at 27%, which is almost double the rate of non-Indigenous Australians (14%).

There are approximately 798 365 Indigenous Australians, representing about 3.3% of Australia’s total population. Since 1996, the share of Indigenous Australians living in urban areas has increased from 73% to 79%. This has been mainly driven by the larger proportion of Indigenous Australians living in cities, which rose from 30% to 35% between 1996 and 2016. As a demographic group, Indigenous Australians tend to be younger, have a higher fertility rate, and represent an increasing source of labour supply for the economy.

Globalisation, digitalisation, and automation are fundamentally altering the world of work in Australia. About 36% of Australian jobs face a significant or high risk of automation. While this is less than the OECD average (46%), it means that a sizeable share of adults will need to upskill or retrain to meet the needs of future jobs. Future labour market trends will be a real challenge for policy makers in Australia as Indigenous Australians typically work in jobs requiring lower levels of skills, which face the highest risk of being automated over the long-term. They are typically employed in construction, health care and social assistance, as well as public administration and safety jobs. They are less likely to be employed in professional, scientific and technical services or finance and insurance jobs. Indigenous men are in jobs most at risk of automation because they tend to be over-represented in jobs that require lower-levels of skills and within industries facing structural adjustment.

Transforming Indigenous employment services

The Australian Government has prioritised Indigenous employment and there are a number of policies and programmes in place at the Commonwealth and local level. At the Commonwealth level, targets were established through the Closing the Gap agenda with the goal of achieving parity in employment outcomes. Four of these seven targets expired in 2018, including one which aimed to halve the gap in employment. The Council of Australian Governments (COAG) which is an inter-government forum bringing together Commonwealth, State and Territory governments agreed to refresh the Closing the Gap agenda. A formal partnership agreement between COAG and the National Coalition of Aboriginal and Torres Strait Islander Peak Organisations came into effect in March 2019, a key commitment of which was the creation of a new Joint Council on Closing the Gap. The COAG statement on this emphasises the importance of partnerships with Indigenous Australians guided by the principles of empowerment and self-determination. The new draft targets around employment for 2028 are 65% of Indigenous Australian youth (15-24 years) in employment, education or training and 60% of Indigenous Australians aged 25-64 years employed.

Employment services have an important role in connecting Indigenous Australians to available jobs in the labour market. Previous OECD work in Australia has highlighted the effectiveness of the Australian employment services model, which devotes funding to unemployed job seekers based on their level of disadvantage. As such, a Job Seeker Classification Instrument is used to assign job seekers to a stream of services – either A, B. or C – with A being the least disadvantaged and C being the highest level of disadvantage in the labour market.

Within Australia, jobactive is one of the key employment programmes connecting job seekers with employers. It is delivered by a network of service providers across 1 700 locations in Australia. Each service provider has intimate knowledge of the local labour market in which they deliver programmes and services. jobactive replaced Job Services Australia in 2015 with a five year operational mandate.

The Australian Government is currently in the process of planning the future of employment services. The most recent budget announced that a new model is being piloted from July 2019 before being rolled out nationally from July 2022. This model is currently being piloted in Adelaide, South Australia and Mid North Coast, New South Wales. The new settings will be tested and evaluated and enhancements made through a co-design process with providers, employers and job seekers. The Australian Government will work closely with providers in these regions to establish and deliver the pilots. The new model places a strong emphasis on “going digital”, while also providing more flexibility to service providers to better cater their services to enhance employability options for more disadvantaged job seekers. The pilot will test five key aspects of a new employment services model, which include: 1) aspects of a new job seeker assessment framework; 2) new Digital Plus service and Enhanced Services offerings; 3) a flexible, points-based mutual obligations system; 4) performance management and payment structures; and 5) how employers engage with the new system.

The Trial locations were selected to test how the new model can best support Indigenous job seekers. As part of the Enhanced Services offer, providers will be incentivised to deliver tailored and culturally appropriate support. The Trial will also examine how the new model interacts with complementary employment and training programmes. While the Trial will not test the new licencing approach, the new model will allow for specialist providers, including specialists in supporting Indigenous job seekers.

In addition to jobactive, the government has a suite of Indigenous-specific programmes that aim to achieve better employment outcomes. This includes 31 Vocational Training and Employment Centres (VTECs) across Australia. VTECs work with employment services, Indigenous communities and industry employers to source, train and support Indigenous Australians into jobs. VTEC providers prepare Indigenous Australians for a guaranteed job before the job starts, and then provide ‘wrap around’ support for the first 26 weeks of work, at no cost to the employer. VTECs operate with the support and involvement of local Indigenous communities and their leaders.

The Australian Government also funds Tailored Assistance Employment Grants (TAEG) to connect working age Indigenous Australians with real and sustainable jobs as well as assisting Indigenous students to transition from education into the labour market. TAEG has been designed to respond flexibly to local employment conditions with streams of support available to 1) provide training and post-placement support; 2) assist Indigenous students to complete their studies while providing practical work experience; and 3) support apprenticeship and traineeship opportunities for vocational training and senior secondary school studies.

Employment services in Australia will need to continually evolve to be responsive to new labour market trends. While automation will likely bring positive impacts on the overall productivity of a local economy, it also has the potential to exacerbate barriers to employment for Indigenous Australians. Indigenous Australians who have been unemployed or discouraged from looking for work require access to a comprehensive menu of employment and training supports customised to their unique values and cultural identity. This requires a local network of programmes and services working toward a strong vision, supported by leadership – both from Indigenous Australians and employers. No single organisation can work in isolation and expect to achieve better employment outcomes. The Australian Government should consider the following recommendations to better promote Indigenous employment outcomes over the long term.

Building the skills of Indigenous Australians

Move Indigenous Australians up the skills ladder

Skills are a fundamental pre-condition for employment success. People with higher literacy, numeracy, and digital problem-solving skills have better labour market outcomes. In fact, an additional year of completed formal education is associated with an increase in the likelihood of being employed of about one percentage point and increased wages by 12%. The number of Indigenous Australians holding Certificate III and IV level qualifications rose from 28 200 in 2006 to 70 900 in 2016, an increase of more than 150%. Furthermore, the number of Indigenous Australians aged 15-64 attending university or another tertiary institution more than doubled from 7 000 in 2006 (2.6% of the Indigenous Australian population) to 15 400 in 2016 (3.9%).

Indigenous Australians tend to be overrepresented in certificate III level attainment and underrepresented in higher level qualifications, such as advanced diplomas/degrees, bachelor degrees, graduate diplomas/degrees, and postgraduate diplomas/degrees. The gap between Indigenous and non-Indigenous Australians is particularly high when looking at education attainment in bachelor degrees, where it stands at 12 percentage points.

Lower levels of skills is therefore one important factor in explaining disparities in employment outcomes between Indigenous and non-Indigenous Australians as well as a concern for future employment. Projections produced by the Department of Employment, Skills, Small and Family Business show that jobs requiring a Bachelor degree or higher qualification are likely to grow by 10% or 400 000 jobs between 2019-2024.

The case studies for this OECD report in Sydney and Perth highlighted the importance of gearing training opportunities to sectors facing shortages, such as health care and education. Several of the providers have set-up outcome-based partnerships with local training institutions to deliver programmes that lead to an accredited qualification. Many of the providers are focused on delivering literacy and basic skills training recognising that it remains a significant barrier for Indigenous Australians to find a job.

There are also a number of targeted national programmes in Australia which aim to build the skills of Indigenous Australians at both the vocational and higher education level. This includes the Higher Education Participation and Partnerships Program, the Australian Indigenous Mentoring Experience (AIME), Indigenous Student Success Programme, as well as support for Indigenous higher degrees. Given the overall increase in the number of Indigenous Australians participating in educational opportunities, these programmes are having a positive impact.

It is important that vocational and higher education institutions make space for indigenous values within their organisations. Successful participation of Indigenous Australians in formal education and training programmes often involves learning the “academic culture” of institutions, which may be in conflict with Indigenous values. This would include the direct employment of Indigenous administrators, teachers, tutors, and support staff within vocational and higher educational institutions. It would also include involving Indigenous communities in the development of course curriculum and delivery.

Australia can look to other OECD countries for different strategies that can be pursued to improve overall skills attainment. In Canada, Indigenous-led education and training institutions have been set-up to promote Indigenous learning institutions that aim to inject Indigenous culture into programme curriculum and delivery. In New Zealand, university presidents regularly convene to discuss different strategies to improve Indigenous student outcomes. This has raised the awareness of senior leadership with these institutions on how curriculum and course delivery needs to be adapted to ensure Indigenous student success.

Higher-level apprenticeship programmes could provide pathways for Indigenous Australians to raise their skills levels

Apprenticeship programmes are designed to combine skills development in both the classroom and directly on the job. Apprenticeships gained a lot of traction across the OECD following the Global Financial Crisis given that countries with strong apprenticeship systems, such as Germany and Austria, maintained relatively low levels of youth unemployment. In Australia, there are both apprenticeships and traineeships, which aim to smooth the transition from school to work. Apprenticeships usually last 3-4 years focusing on trade-related jobs whereas traineeships tend to last 1-2 years and focus on service-related occupations. Both apprenticeships and traineeships require a contract of training and combine on- and off-the-job training.

As training pathways for Indigenous youth in Australia, apprenticeship and traineeship programmes have strong potential to ensure that training is relevant to industry needs and leads to a good job. In recent years, there has been an overall decline in the take-up of apprenticeships in Australia, with registrations more than halving from 376 900 in 2011-12 to 162 600 in 2016-17. However, Indigenous Australians make-up a higher proportion of overall apprenticeship participation than non-Indigenous Australians.

In general, more can be done to provide strong labour market information to young Indigenous Australians about the job opportunities and expected wages available through apprenticeship training. There are also opportunities to promote Indigenous apprenticeship participation among employers through direct marketing campaigns as well as business-to-business campaigns to demonstrate the benefits of apprenticeship training. Registered Training Organisations (RTOs) in Australia could actively work with employers on a regional or sector basis to help ease some of their administrative burden to offer apprenticeships, especially for Indigenous Australians. For example, RTOs could assist employers to register Indigenous apprentices and reduce the administrative paperwork during the duration of the apprenticeship programme – often a critical barrier facing SMEs when trying to participate in apprenticeships because they do not necessarily have a human resources function.

Going forward, the government could also look at the potential of higher apprenticeship programmes as a way of improving overall skills attainment among Indigenous Australians. While not targeted to Indigenous Australians, higher level apprenticeship programmes are being tested in Australia leading to a qualification at the diploma and advanced diploma level. Lessons from the United Kingdom show that higher apprenticeship programmes can be successful in leading participants into a sustainable job. According to government figures, 90% of apprentices in England stayed on in employment after completing their qualification, of which 71% stayed with the same employer.

Embed mentorship into the delivery of employment and skills training programmes

Mentoring is critical to both build the motivations of Indigenous Australians to participate in the labour market but also to ensure employment retention. Within the workplace, mentors are critical in establishing trust and strengthening employee-employer relations. In many cases, Indigenous Australians have extended family, social obligations and cultural responsibilities that many mainstream workplace managers do not always understand. These responsibilities often mean that they might require days off work that are not traditionally taken, which can negatively impact the sustainability of a job.

Within the delivery of employment services, jobactive mentoring support allows providers to use the Employment Fund to purchase the services of specialist Indigenous mentors to provide pre- and post-placement support to Indigenous job seekers and their employers. All providers interviewed for this OECD study highlighted the different ways in which they are promoting mentorship to both match Indigenous Australians to jobs but also to encourage employers to create workplaces that facilitate Indigenous employment. Many of the providers consulted for this OECD report are using this flexibility within the Employment Fund to support mentoring opportunities.

While there are already a number of interesting national initiatives, the Government should consider increasing the use of mentorship as a tool for supporting Indigenous employment. For example, the Australian Government could look to expand workplace mentoring programmes focusing on Indigenous Australians. More awareness campaigns to employers could be also be examined to highlight the important role that mentoring plays in promoting sustainable employment opportunities.

Connecting Indigenous Australians to jobs

Place-based employment strategies can advance the principles of self-determination and empowerment

A key principle highlighted from the case studies consulted for this OECD report is the importance of Indigenous leadership within the management and implementation of employment programmes. When programmes are directly managed and delivered by Indigenous Australians, they are more likely to address the culturally-specific barriers facing this group.

The Australian Government has invested in a trial programme for place-based employment services in the Indigenous community of Yarrabah in northern Queensland. The trial has involved the establishment of a new local community organisation to deliver employment support to the community. The Australian Government committed an additional AUD 5 million for a flexible funding pool available to support the delivery of the model, assist in building capacity of the service provider and deliver local employment and economic development projects. The objectives of the trial are to respond to the needs of the Yarrabah community and to build its capacity to inform and set service delivery priorities. The trial presents an opportunity to test a different approach to the delivery of employment services for Indigenous Australians.

Key elements of the model include local community leadership, culturally appropriate service delivery, community involvement in decision making, targeting the interests of participants and linkages to training, employment or a social outcome. While the pilot was just introduced in July 2018 and evaluation results will not be available for a while, this type of place-based programme can help ensure that Indigenous Australians are provided with a chance to co-design and directly deliver more integrated services in their community.

Going forward, a place-based approach may have the benefit of encouraging a “one-stop shop” model, where a range of employment, skills development and other social supports such as housing and child care can be offered in one location at the community level. Many of the providers consulted for this OECD study noted the importance of full wrap-around and intensive supports to Indigenous Australians, including life coaching and counselling, housing supports, as well as other personal services, such as child care. Opportunities for place-based approaches to Indigenous employment could be considered within the new employment services model as an opportunity to address the multi-faceted barriers that Indigenous Australians face in trying to enter and remain in the labour market.

Build the capacity of providers to deliver Indigenous employment programmes

A 2018 survey by the National Employment Services Association of 2 251 frontline workers revealed that about 6% of staff identified as being Indigenous. In line with the principle of Indigenous programmes being directly delivered by Indigenous Australians, there are opportunities to build capacities with the employment services sector to ensure there are more Indigenous front-line staff.

Ensuring that service providers are culturally competent is critical to the delivery of successful programmes for Indigenous Australians. Facilitating the growth of Indigenous organisations and enabling them to deliver services (mainstream and Indigenous specific) will ensure that Indigenous Australians have access to appropriate and culturally competent support that connects, and reduces the barriers, to employment.

The Australian Government is already working with mainstream providers to ensure that they are culturally competent and understand the unique characteristics and experiences of Indigenous Australians. For example, the Department of Employment, Skills, Small and Family Business is convening a National Indigenous Employment Forum to support collaboration between employment service providers to discuss practical approaches to servicing Indigenous job seekers. The Department also supports existing providers through face-to-face training, provider workshops, and the sharing of best practices. It should also be noted that jobactive providers are generally required to have and implement Indigenous capability strategies, which is considered as part of the procurement process for deciding on which providers will deliver services. Indigenous capability strategies are meant to map out how organisations will deepen their understanding of Indigenous culture to support national reconciliation while also articulating specific actions to improve employment.

The government should continue this important work with the employment services sector. Professional development programmes and knowledge exchanges within the sector to share best practices about service design principles will strengthen the capacity of the employment services sector overall. Key lessons emerging from the case studies in Perth and Sydney show that culturally appropriate services make a difference in fostering trust between the provider and the job seeker.

Work with employers to promote cross-cultural training

It is important to recognise that Indigenous employment is not just a government initiative – private sector leadership is critical. Employers in Australia must also work to close the gap and adopt appropriate Indigenous hiring practices. There are a number of good practices already underway in Australia but there is also a clear opportunity to promote more employer leadership in driving better employment outcomes. For employers, this requires good human resources management policies within the workplace that support diversity and Indigenous employment.

Training programmes that aim to develop awareness and knowledge needed to interact appropriately and effectively with Indigenous Australians should be an important element in every firm’s human resources strategy. Furthermore, Indigenous cultural awareness should be closely linked to mission statements, policies, organisational values and service delivery objectives. A culturally aware workplace should be free of racism and a safe and inclusive environment for Indigenous Australians.

Many of the providers consulted for this study are actively working with local firms to promote and develop cultural awareness training policies and Reconciliation Action Plans, which provide a framework to create greater unity between Indigenous and non-Indigenous Australians.

The government can work with large and small companies to help identify employers who are adopting successful Indigenous employment human resources practices. More can also be done to work with employer associations, such as the chambers of commerce as well as various sector bodies, to promote Indigenous employment and identify firms that are creating culturally sensitive workplaces. The government could even consider a national awards or recognition programme for employers that are making a difference in Indigenous employment. The government could also work with facilitators or intermediary bodies to create products and services for employers that aim to create inclusive workplaces for Indigenous Australians. It is particularly important to work directly with firms to look at issues pertaining to corporate leadership, communications/marketing, procurement and Corporate Social Responsibility (CSR).

Enhanced access to pre-employment supports and services can help ensure a sustainable job

Many Indigenous job seekers require long-term strategies and employment interventions to get them into a position of employment readiness as a pre-condition for a quality job. OECD research has consistently highlighted that while work-first strategies can be effective in reducing unemployment, mixed strategies focused on job readiness and skills acquisition can be even more effective over the long term in contributing to better employment and income earnings.

Future employment services will feature an enhanced digital offer, but caution should be exercised for Indigenous job seekers. They often face challenges related to digital literacy skills and therefore might not able to take full advantage of these new types of services. There is an advantage to incentivising face-to-face services for Indigenous job seekers to ensure they receive the customised support and intervention they require to find a good job.

Going forward, the new employment services should ensure that Indigenous Australians have expanded access to more face-to-face services and pre-employment supports to overcome the complex barriers to employment. This will require a stronger focus on individual case management strategies where the needs of Indigenous job seekers are front and centre. Key lessons from the case studies shows that effective placement requires job readiness training, skills development related to a specific local industry, or employment or work experience placements.

The Australian Government established Vocational, Training & Employment Centres (VTECs) to connect Indigenous job seekers with guaranteed jobs and bring together the support services necessary to prepare job seekers for long-term employment. The guarantee of employment before job-specific training starts is the key feature of VTECs. VTECs bring together a comprehensive range of support for job seekers to build vocational and non-vocational capabilities. This includes literacy and numeracy training, work experience, as well as pre-employment and job training. Under this model, over 10 000 Indigenous jobseekers have been placed in jobs and of these, 59% or 5 866 job seekers, have been in work for over six months.

Feedback from the case studies in Perth and Sydney who are delivering programmes under the VTEC model suggests that access to basic literacy skills training remains a major challenge for the Indigenous job seekers in which they provide services. The VTEC model seems to be making a difference because it provides flexibility for providers to deliver this type of skills training, which helps build the employability skills of Indigenous job seekers.

Promote stronger local partnerships by reducing administrative burden

While the current jobactive model is relatively efficient in ensuring that the intensity of services are adapted to the level of disadvantage facing job seekers, this outcomes-based model can create competition among providers locally. Many of the providers consulted for this OECD study noted the importance of collaboration, but in practice they remain focused on meeting their comprehensive accountability requirements, which focus payments on getting people into work. The providers noted that accountability and administrative requirements require time and resources, which sometimes limit collaboration opportunities. As an example, many of the national employment programmes, such as jobactive, Vocational Training and Employment Centres, Disability Employment Services, Transition to Work, and ParentsNext have different accountability requirements, which creates a strong administrative burden on individual providers to meet national government programme conditions.

More collaboration among providers could be beneficial to ensure Indigenous Australians receive the right intervention. For example, some job seekers may be initially referred to providers who might not have the capacity to deliver the full suite of services or capacity to place them into a job. To encourage more local collaboration, Indigenous “champions” could be established to work strategically with providers, employers, as well as other leaders to build awareness about community opportunities and information on Indigenous employment programme design.

The 2018-19 Australian Budget announced the establishment of Regional Employment Trails, where local facilitators will work with Regional Development Australia (RDA) committees to develop local employment projects. Projects will bring together stakeholders and employment services providers to tackle employment challenges. While it is too early to evaluate the impact of this new initiative, the Australian Government could look at how to adapt it to focus on Indigenous employment outcomes. Given the skills, networking, and leadership required, it would be best to have a facilitator with a specific mandate to focus on Indigenous employment.

Australia could look to recent changes launched in Canada under its newly branded Indigenous Skills and Employment Training Program (ISETS), which includes a focus on higher quality jobs. Under the programme, the government directly contracts with Indigenous service providers across Canada to deliver active labour market and skills training programmes. Canada is moving from 5 to 10 year accountability agreements to enable Indigenous-led organisations to be more flexible in how they deliver programmes. The intention is to ease accountability and administrative requirements to encourage collaboration. Active efforts are also being made in Canada to reduce the overall administrative burden on service providers in terms of accountability requirements so they can spend more time directly delivering programmes.

Fostering local ecosystems for Indigenous job creation

Promote stronger community engagement with Indigenous Australians

In both Sydney and Perth, there are examples of initiatives which aim to strengthen Indigenous engagement. In Sydney, the Inner Sydney Aboriginal Alliance is setting a new standard for Indigenous engagement with government through Empowered Communities. It provides a platform for Indigenous Australians in Inner Sydney to unite with one voice to design and direct tailored solutions for the community’s needs. In Perth, the City of South Perth Aboriginal Engagement Strategy provides opportunities for city staff to develop an awareness of Noongar/Bibbulmun culture, history and current issues through information, education and networking.

More can be done in regions and cities across Australia to replicate these type of initiatives, which aim to foster stronger dialogue with Indigenous Australians about their values and customs. Regions and cities can be viewed as spaces of policy opportunity to bring together relevant stakeholders to discuss issues and find collaborative and people-centred solutions. Regional and local leaders can lead the development of partnerships with firms to build awareness about good human resources practices as it relates to Indigenous employment.

City Deals in Australia aim to bring together different levels of government alongside community organisations and the private sector to build long-term partnerships at the local level. As jobs and skills has been identified as a key theme for City Deals by the Australian Government, there is an opportunity to promote Indigenous employment through this initiative. As an example, Western Sydney is undertaking a number of major infrastructure projects, including the construction of a new Western Sydney Airport. They are also establishing the Aerospace Institute, which will focus on education and training opportunities in emerging sectors of the region. There are clear opportunities to assess how Indigenous employment can be promoted within the implementation of these major city-led projects.

Australia can look to Canada and New Zealand where some cities are making active efforts to ensure Indigenous people are involved in partnerships at the city level. In 2015, the Mayor of the City of Winnipeg, Canada, announced the establishment of a Mayor’s Indigenous Advisory Circle (MIAC). The role of the MIAC is to advise on policies the City of Winnipeg can implement to further build awareness, bridges and understanding between the Indigenous and non-Indigenous communities. Similarly, the City Council of Christchurch, New Zealand, has adopted a Multicultural Strategy, which aims to foster inclusion, participation and access to public life of all minorities in the city, including Indigenous people. The Multicultural Strategy includes promoting the diversity of cultures and languages in the city through its libraries; celebrating cultures through local and citywide cultural events promoting the diversity of Ōtautahi/Christchurch people; funding that supports diverse communities' social connections, cultural celebrations; and efforts to reduce barriers to participation in all aspects of city life.

Better track Indigenous entrepreneurship activity that provides new opportunities for job creation

The number of Indigenous Australian business owners has more than tripled in recent years. In 2016, there were 11 592 business owners compared to 3 281 in 2011. Despite this impressive increase, Indigenous business owners still correspond to less than 1% of overall business owners in Australia.

The government has created Australia’s first Indigenous Business Sector Strategy, which includes the establishment of Indigenous Business Hubs anchored to major cities. They serve as a one-stop-shop for business advice and support. The government has also introduced a pilot Indigenous Entrepreneurs Capital Scheme to provide easier access to finance and capital products for Indigenous businesses. There is also support for Indigenous businesses that wish to take advantage of major infrastructure or service delivery projects as well as efforts to double the microfinance footprint across Australia to support more entrepreneurial activity among young people and women.

Indigenous entrepreneurs in Australia are faced with several challenges that inhibit them from starting and running a business, as compared to non-Indigenous people. Access to capital or equity is limited. While financial institutions are more prevalent in cities, urban Indigenous entrepreneurs still lack access to financing opportunities compared to non-Indigenous entrepreneurs. Furthermore, lower levels of educational attainment may prevent Indigenous Australians from starting a business. Without exposure to financial literacy training, managing revenues, expenses and finance of an organisation can be challenging. In addition to the narrow possibilities for funding ventures, some prospective Indigenous entrepreneurs might not be aware of the funding options that are available.

Accelerator and business incubator programmes are generally clustered in inner-city metro areas, away from Indigenous Australians who tend to be located in outer suburbs and regional areas. There are also challenges for Indigenous entrepreneurs to scale-up their business after successfully launching. Without strong investments in business skills and easier access to capital, there are significant risks that Indigenous entrepreneurs will not be profitable.

In Australia, more efforts can be undertaken to strengthen entrepreneurship education which place the entrepreneur at the centre and connect the various range of entrepreneurial actors (e.g. both potential and existing), organisations (e.g. firms, venture capitalists), and institutions (e.g. higher education and financial bodies). OECD research has highlighted the importance of creating a local culture that favours entrepreneurial risk-taking and corporate spinoffs.

For Indigenous entrepreneurs, the government should continue to work with the private sector to provide business advice and mentoring where experienced Indigenous entrepreneurs would be the main source of information. There should be a strong focus within Indigenous entrepreneurship programmes on coaching, training and peer learning. In general, it is important to better expose Indigenous entrepreneurs to venture capital, angel investors, and other forms of funding. Lastly, the government could look to the early-stage equity investment gap left by venture capital funds due to the inherently high costs and uncertainty of start-ups, especially among Indigenous entrepreneurs.

Continue to use procurement policies to promote social inclusion

At both the Commonwealth and state level in Australia, governments are using their spending power to promote Indigenous business development employment outcomes, which is a positive development. For example, at the Commonwealth level, since July 2015, the Australian Government’s Indigenous Procurement Policy has led to over AUD 284.2 million in Australian investments with 12 520 contracts awarded to 1 524 Indigenous businesses. It has also resulted in state governments agreeing to consider establishing state-specific whole-of-government Indigenous procurement policies and Indigenous employment and Indigenous business targets.

Going forward, it is critical to continue looking for opportunities to leverage infrastructure investments in cities and regions across Australia to promote Indigenous employment and skills development opportunities. For example, when awarding major railroad or transport infrastructure investments, contracts can be set-up to ensure that employers are offering a targeted number of apprenticeships or other skills development opportunities to Indigenous Australians.