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Curing with procurement

How can the government tackle long-term unemployment and place-based disadvantage at little or no cost?

The answer could be social procurement, according to the head of market and sector development for Social Traders, Mark Daniels.

Procurement is the process of acquiring goods, services and works; using this process to generate social outcomes is known as social procurement.

Local, state and federal governments can use social procurement to generate targeted employment for a specific population group, such as people with a disability, the long-term unemployed, indigenous people, culturally and linguistically diverse groups, youth, public housing tenants, or people in regional, rural or disadvantaged metropolitan areas.

“Social procurement is gathering momentum. Internationally it is ramping up as countries facing austerity measures look at different ways of spending their money to achieve multiple objectives,” Mr Daniels told Our Community.

Social Traders is a member of the Social Procurement Australasia group, which was established with the aim of increasing the social impact of procurement in Australia, New Zealand and the region.

The group has released a new report presenting the business case for social procurement to government.

According to Social Procurement: The Business Case, the three levels of Australian government collectively spend an estimated $141 billion on procurement.

The impact that could be leveraged from $141 billion is enormous, the report said.

“Where it is happening it is delivering stunning outcomes,” Mr Daniels said.

In 2012, the Toowoomba Regional Council awarded a waste management contract to Ability Enterprise to operate the gatehouse for the council’s waste transfer stations.

The company used the $2 million contract to employ 40 local people with a disability, more than half of whom had been out of work for at least ten years.

“Many of those who work in the gatehouses have a disability and it’s fantastic to see how well they’ve settled into their new role,” Toowoomba Regional Council Mayor Paul Antonio said.

“All in all it’s a win-win situation for everyone involved and I encourage any business owner who is seeking new labour to consider looking at the social procurement model.”

Telstra is another Australian company that has embraced the model, Mr Daniels said.

In 2010, Telstra created more than 300 jobs for people with disabilities by switching from commercial cleaning and maintenance suppliers for their phone exchanges to social enterprises that employed people with disabilities.

In Victoria, the Department of Human Services created more than 1000 jobs for unemployed public housing tenants by linking tenant employment to maintenance, security and construction contracts.

“Intuitively we know that buying multiple outcomes for the cost of one output makes sense,” Mr Daniels said.

“The business case goes beyond intuition, drawing on case studies and evidence to make the case. If the business case is successful we will see treasuries across Australia questioning how they measure value for money and utilising the $140 billion in government spend to deliver social benefits that go way beyond their current welfare programs.”

Read the full report here.