The web of our life is a
mingled yarn,
good and ill together.
All's Well That Ends Well, Act
four, Scene three.
All that glisters is not gold ...
Gilded tombs do worms enfold.
The Merchant of Venice, Act
two, Scene seven.
From today, 1 July 2026, the Indigenous Procurement Policy
operates under tightened eligibility rules. To access Commonwealth contracts, a
business must now be 51 per cent or more First Nations owned and controlled or
registered as being Indigenous owned by the Office of the Registrar of
Indigenous Corporations (ORIC). This raises the threshold for access to the
scheme, up from the original 50 per cent ownership threshold that has applied
since 2015. A transition year allows firms sitting on the old criteria to
adjust. The Commonwealth's purchasing target also steps up, from 3 to 3.25 per
cent, on its way to 4 per cent by 2029–30. Minister McCarthy's announcement (link
here) leans on a decade of headline numbers: more than 91,000 contracts,
over $14.2 billion, some 4,900 First Nations businesses.
On its face, this is the continuation of a policy success
story I have followed, on and off, since its early years (link
here and link
here). The IPP has consistently exceeded its own targets, attracted bipartisan
support, and — as I noted when the Indonesia-Australia trade agreement was
being negotiated in 2019 (link
here) — proven durable enough that
Australian negotiators went out of their way to carve out explicit protection
for Indigenous policy measures in an international trade agreement. That is not
nothing.
But the reform arrives alongside two bodies of evidence
that should temper the optimistic tone of the Minister's release, and that
between them go some way to explaining why the ownership threshold, rather than
the systemic changes I would argue are necessary, is where this round of incremental
policy adjustment has landed.
The first is the ANAO's 2025 follow-up audit of the
Mandatory Minimum Requirements, which I wrote about on this blog in some detail
last year (link
here). I urge interested readers to have a look at that post. The ANAO
found that between July 2016 and September 2024, 63 per cent of contracts subject
to mandatory minimum requirements (MMR) targets — worth $69.3 billion — were
exempted from them, often for reasons NIAA could not adequately explain or
assure. NIAA had also quietly cancelled a promised evaluation of whether the
MMRs work at all, with no record of who made that decision or why. When the
ANAO recommended NIAA assure itself that exemptions were legitimate, NIAA
declined, arguing this was a matter for the individual Commonwealth agencies issuing
contracts under the devolved procurement framework — an odd position for the
agency legislatively tasked with monitoring the effectiveness of Indigenous
programs across government, including those delivered by other agencies.
The second is Christian Eva's recent analysis (link
here and link
here) in the Australian Journal of Public Administration, the
first substantial quantitative study of who actually receives IPP contracts.
Using FOI data spanning 2015–16 to 2022–23, Eva finds that the policy's
aggregate success conceals a striking concentration: half of all contracts over
$10,000 went to just 11 firms, and half the dollar value to 18 firms, out of
roughly 3,900 businesses cited as beneficiaries. Forty-one per cent of
contracts and 30 per cent of value went to firms based in the ACT, where only one
per cent of the national Indigenous population reside; firms in the 50–51 per
cent Indigenous ownership band — precisely the group the new eligibility rule
targets — received the largest single share of contract value, while ownership
status for 64 per cent of suppliers could not be verified at all. Eva's broader
argument is that the IPP measures itself against volume and value targets that
are relatively easy to meet, while leaving largely unexamined whether contracts
translate into Indigenous employment, community benefit, or anything resembling
Indigenous-defined success.
Read together, these two pieces of evidence point to the
same gap: a policy whose headline metrics are exceeded almost by design,
sitting on top of compliance and verification infrastructure that neither NIAA
nor the available data can currently vouch for. Raising the ownership threshold
to 51 per cent addresses the most legible version of "black cladding"
— but Eva's own account of the practice describes far more sophisticated
arrangements than a bare ownership percentage. Moreover, the announced reform
does nothing to address the MMR exemption problem, the absence of an evaluation
strategy, or the concentration of contracts among a small, capital-city-based
cohort of repeat winners.
There is also a wider governance backdrop worth noting. My
recent post on ORIC's regulatory performance (link
here) — CATSI corporation reporting compliance has fallen from over 75 per
cent to under 30 per cent since 2015–16 — suggests a portfolio-wide pattern of
declining regulatory capacity, not something confined to procurement. The NIAA
web page describing the current changes (link
here) reveals that the NIAA will be outsourcing the verification process,
or to use the jargon of bureaucratese:
To implement the strengthened
IPP eligibility criteria, the NIAA will soon approach the market to identify a
provider to deliver the verification services.
A strengthened eligibility test is only as good as the
verification and assurance work sitting behind it, and on current evidence that
work is thin.
None of this is an argument against the announced sensible
but modest changes, aimed at strengthening the leverage of Indigenous business
owners vis a vis potential partners in joint ventures seeking to win government
contracts. It is however an argument against mistaking a tighter ownership
threshold for a genuine answer to the questions Eva and the ANAO have both now
put on the public record: who actually benefits from $14 billion in Indigenous
procurement since 2015, and does anyone in government know whether the policy
is achieving what it was designed to achieve?
A decade on, with the headline targets rising to 4 per
cent, those remain open questions — and the ‘strengthened’ IPP, as currently
designed, is not built to answer them. Commenting to the National Indigenous Times
last December on the extraordinary expansion of Commonwealth procurement with Indigenous
firms, Christian Eva commented (link
here):
That's not nothing. But with
any Indigenous program at a federal level, we really do need stronger
transparency and stronger accountability.
I agree wholeheartedly. But I would sharpen those observations
by noting that the announced changes appear to avoid the hard questions such as
how to ensure that the Indigenous partners in joint ventures benefitting from
the IPP — even when formally in control — are not co-opted or inappropriately
induced to participate in business arrangements that allow mainstream
businesses to access government contracting opportunities.
Removing these potentialities requires robust and
coordinated regulatory oversight that to date has been absent, regular independent
evaluations, and an acknowledgment that if the IPP is to be sustained, it must
demonstrate that it is benefiting both the interests of First Nations business
owners and the public interest more generally. The IPP if well designed and
effectively implemented can be win/win; but without rigorous regulatory oversight,
it can easily slide into lose/lose.
The record of the development of the IPP is a mingled yarn,
good and ill together: the question the Minister’s announcement does not ask,
let alone answer, is how much of the gold is real.
This post has been developed with the research assistance
of Claude Sonnet 5
1 July 2026
