Time hath, my lord, a wallet at his back,
Wherein he puts alms for oblivion.
Troilus and Cressida, Act three, Scene
three
Summary
This
post covers a lot of ground, so I have decided to include an upfront summary
which provides a high-level roadmap of the key arguments. Last week the Treasurer
issued terms of reference for the Productivity Commission's second triennial
review of Closing the Gap. On closer reading, those directions steer the
Commission back towards refining the existing framework rather than considering
why the Closing the Gap framework isn't working. Federal, state and territory governments
have a poor record of translating their formal agreement to previous review
recommendations into action. After almost a quarter century, the Closing the
Gap Framework is looking tired and vulnerable, and community support is fading.
In my estimation, the forthcoming Review is likely the last opportunity to
revitalise and refocus the institutional architecture that governs Closing the Gap
before community sentiment turns against it. If the opportunity is not taken, the
National Agreement will be increasingly vulnerable to abolition. This will
require the Commission to broaden its focus and undertake a hard-headed strategic
and structural reconsideration that current circumstances require.
Background
This
post focusses primarily on the role of the Productivity Commission (the
Commission) in relation to the oversight and administration of the Closing the
Gap process. The Productivity Commission has responsibility for producing the
Closing the Gap Information Repository, which tracks progress against the 19
socio-economic targets and four Priority Reforms agreed in the National
Agreement on Closing the Gap (link here). Under the
National Agreement (link
here), the Commission is also responsible for undertaking a triennial
review of progress (see clauses 121–124). An important reason for ensuring
strong analytical clarity in the Commission’s review derives from the reality
that there is at least an appearance of conflict between the Commissions role
as administrator of the target metrics and its role as an independent reviewer.
The terms of reference
The
Commonwealth Government has announced the terms of reference for the
Productivity Commission's second triennial review. The review is scheduled to
be finalised by the end of 2027. According to Treasurer Chalmers and Minister
McCarthy's joint media release (link
here), the Commission will assess the outcomes, effectiveness and impact of
measures by all governments and the Coalition of Peaks against the targets, and
has been asked to complete a more explicit examination of funding, investment
practices and community-controlled sector resourcing — including whether
government expenditure is aligned with, and supporting, the Priority Reforms.
The
review web page (link here) frames it this
way:
Every three years, the Productivity
Commission is required to independently review how parties to the National
Agreement on Closing the Gap are progressing towards their commitments. This is
the PC's second review. We will focus on what's working and why, and what can
be done differently to achieve meaningful change.
The
Terms of Reference issued by the Treasurer state, inter alia:
Background
… The review will provide an analysis of
progress on Closing the Gap against the priority reforms, targets, indicators
and trajectories, and examine the factors contributing to progress,
including by drawing on evaluation and other evidence. Parties have committed
to undertaking actions if the review indicates that achievement of any of the
targets that are set out in the Agreement is not on track.
Scope of the review
The review will assess how effectively
the Agreement is supporting improved life outcomes for Aboriginal and
Torres Strait Islander peoples. In undertaking the review, the Productivity
Commission should:
·
Have
regard to all aspects of the Agreement and consider the progress,
implementation efforts and annual reports of all parties, including
jurisdictional progress by the Commonwealth and states and territories
·
Assess
progress against
the four Priority Reform areas and 17 socioeconomic outcomes [sic — the
Agreement specifies 19 targets], including identifying successful approaches,
partnerships and delivery models that have demonstrated positive impact
·
Draw
on available evidence and evaluation findings, to assess impact, deliverables
and outcomes, and progress towards developing measures for the Priority
Reforms targets and indicators and outstanding data under socioeconomic targets
·
Assess
whether commitments under the Agreement that relate to prioritising and
reporting on funding and resourcing to First Nations community-controlled
sectors are being met, and whether they are driving changes in the way
investments are made and improved outcomes against the Priority Reforms
·
Assess
whether new and existing funding – both dedicated and mainstream – is being
effectively mobilised to achieve the objectives of the Agreement.
The review is to have regard to and
complement – not duplicate – the previous findings of the first Productivity
Commission review of progress on the National Agreement, published on 7 January
2024, and the Independent Aboriginal and Torres Strait Islander-led Review,
published on 21 June 2025.
The
terms of reference are, on the surface, reasonably comprehensive. There are
some positive elements: the specific mention of the contribution of mainstream
funding to shaping outcomes, and the narrow possibility left open for the
Commission to recommend changes to the National Agreement — albeit given the
repeated focus on ‘progress’, the subtext appears to be to nudge the Commission
towards a narrow focus on incremental adjustment to targets, indicators,
trajectories and data improvements. These are all potentially important, but I
would argue that more structural reform is necessary.
Reading between the lines
Close
reading of the terms of reference raises a number of issues that are worth
contemplating and may prefigure the approach the Government expects the
Commission to pursue:
·
The
Treasurer is at pains to avoid mentioning failure, and the repetitive use of
the word "progress" continuously reinforces the ‘strength-based’
approach that infused the initial selection and framing of the targets by governments
(and it must be said the Coalition of Peaks).
·
The
focus is primarily on doubling down on the current framework and, ostensibly,
on how best to refine it and make it work better.
·
The
Treasurer sidesteps the elephant in the room: the failure to make progress
against virtually all targets (especially in relation to remote regions where
outcomes are much more dire than the national outcomes), and — more importantly
— the adequacy (in terms of timely and tangible outcomes) of governments' own
responses to the two previous reviews, most of all the first Commission Review.
·
The
focus on funding has been left vague, and thus open to misinterpretation. The Ministers’
media release appears to make clear in relation to the ‘explicit examination of
funding, investment practices and community-controlled sector resourcing’ (by
referencing alignment with the Priority Reforms) that the intention is to nudge
the Commission towards recommending funding shift from non-Indigenous private
sector and NGO providers to community-controlled organisations — a strong nod
to the Coalition of Peaks' primary agenda. However, it can equally be read as a
call for more rigorous assessment of funding efficacy more generally. The
Australian headlined its report of the announcement of the Terms of Reference
on 29 August 2026 as ‘Review of Indigenous Funding: Is pouring cash into the
Gap effective?’ (paywalled).
The tax expenditure blind spot
One
important but invariably overlooked mainstream funding issue relates to the
inequitable distribution of mainstream ‘tax expenditures’. The Terms of Reference refer to ‘funding’, but
tax expenditures are just as relevant to whether government support for Closing
the Gap is effective. Take one obvious example: the benefits available to
homeowners in our tax system are systemically biased towards non-Indigenous
homeowners (link here). The Capital Gains
Tax exemption on the sale of a primary residence alone is estimated by Treasury
to cost the Commonwealth $66 billion in 2026–27, rising to $78.5 billion in
2028–29 (see exemptions E7 and E8, 2025–26 Tax Expenditures and Insights Statement,
p.166: (link
here). According to 2021 Census data, 42% of Indigenous households own
their own home, compared to 67% of all Australians (link here).
It follows that these benefits flow disproportionately to non-Indigenous
homeowners.
While
I accept that the language in the Terms of Reference's speaks of ‘funding’ and ‘investment’
rather than the tax system, the tax system is exactly the kind of ‘mainstream’
lever the Terms of Reference professes an interest in ("whether new and
existing funding – both dedicated and mainstream – is being effectively
mobilised"), and it bears directly on housing and economic outcomes that
sit squarely within the socioeconomic targets. A serious assessment of whether
mainstream expenditure is ‘effectively mobilised’ toward Closing the Gap
objectives can't extend merely to direct program spending and ignore the significant
sums the tax system silently redirects away from the people the Agreement is
meant to benefit.
The missing 2031 endpoint
There
is no term of reference raising directly the rapidly approaching endpoint for
most of the targets in 2031. This is likely to be the last review before a
post-2031 policy framework for the National Agreement, its targets and its
priority reforms would need to be in place if there is not to be a temporal gap
in the frameworks implementation. This makes the absence of a specific mention
in the Terms of Reference potentially problematic.
Governments' record on implementing previous reviews
Perhaps
the most egregious absence in the terms of reference is any reference to
assessing the adequacy of governments' implementation of their own unanimously
positive responses to the previous reviews under the National Agreement, both
formal and informal.
In
relation to the first Commission review, Joint Council met in July 2024 and
noted (link
here):
Joint Council welcomed the Productivity
Commission's first Three-Yearly Review of the National Agreement on Closing the
Gap … Halfway through the National Agreement key structures and processes have
been established. But Joint Council agreed more needs to be done to deliver on
the ground and in communities. Joint Council agreed to the four key
recommendations of the Review and to 15 of the 16 recommended actions…
Given
that governments agreed to the recommendations, and yet the rate of progress is
in reverse virtually across the board, the obvious questions are: were the
recommendations not implemented? Were they inadequately framed by the Commission
review team in the first place? Or both? Hopefully the forthcoming Review will enlighten
us.
The
subsequent record is a case study in process overwhelming substance. At the
June 2025 meeting, Joint Council noted the findings of the Independent
Aboriginal and Torres Strait Islander-led Review and undertook to ‘formally
respond to the Report at their meeting in November 2025.’ At the November 2025
meeting, it agreed instead to ‘prioritise finalisation of its response by the
end of February 2026.’ By the following meeting in May 2026, it had settled on
implementing ‘11 Partnership Actions,’ (which are in fact agreements to
cooperate, hardly actions) with members ‘committed to working through remaining
Partnership Actions to find an agreed approach … as soon as possible.’ The
Joint Council's formal response to the January 2024 Commission review was
eventually published in June 2025 (link
here), and its response to the subsequent Independent Review in May 2026 (link
here).
I
haven't had time or inclination to analyse these documents in detail, but it's
worth noting that while governments agreed unanimously to all but one of the
Commission's recommendations, the proposed implementation of each in these
formal responses is invariably framed in terms of process rather than tangible
action. The Commission might have made more action-oriented, action-limited
recommendations; but the responsibility for what transpired ultimately lies
with governments.
The process problem
My
overarching assessment is that the whole business of responding to, and then
acting upon, the various statutory reviews required by the Closing the Gap
Framework is both extraordinarily slow and overburdened with process.
Governments can manage complex processes, albeit often at a snail's pace, but
most external interests and the public at large have limited capacity to follow
what is being decided (or not) when it extends over years. The effect is to
prioritise torpidity and lethargy as guiding principles for how business is
done. I should note at this point that my earlier submissions related to the first
review (see below for links) made this argument at much greater length. The
more important question — whether recommendations will make a substantive
difference, and whether they will actually be implemented — gets lost in the
mists of that process. Hopefully the current review will both get to the bottom
of this snail-like process and recommend radical simplification, but as noted
above, the current Terms of Reference do not acknowledge this issue and do not
encourage such an analysis.
While
this process of incessant review — two multi-year reviews every three years,
followed by a multi-year process of responding to their recommendations —
grinds on, governments remain relatively immune to any criticism that they
aren't acting, because they can always point to an ongoing review. This mire of
pervasive process, underpinned by a rolling negotiation between nine
jurisdictions and the Indigenous Peaks, seemingly designed to produce lowest
common denominator outcomes, virtually ensures substantive and visionary reform
will never emerge.
Again,
hopefully the Commission's forthcoming review will cut through and make
clear-cut recommendations that create the preconditions for future reform —
because without that, the prospects for the future viability of the Closing the
Gap framework are dire.
What the Commission's own members have said
It's
worth reflecting on the perspective the Commission itself brings to these two
roles — and the place to start is how its members describe them publicly.
In
an August 2023 speech to the National Press Club titled Reflections on
Productivity, Public Policy, and Challenges Associated with Closing the Gap
(link
here), outgoing Chair Michael Brennan spoke at length about the
Commission's role. Two lines stand out:
Only 4 of the 17 targets set out in the
Agreement are on track to be met at this early stage. Others are going in the
wrong direction, like the rate of incarceration … It was never clear what
governments felt they were putting in place that would reverse this trend.
and,
on the labyrinthian impact of the 2,000-plus implementation actions in play at
any one time across the nine jurisdictions:
Granted, governments are busy … But this
busy-ness is, in many ways, just business as usual.
In
her May 2024 Stretton Oration (link
here), new Chair Danielle Wood gave a masterful summary of income and
wealth inequality in Australia (not that Indigenous disadvantage is entirely
encompassed by these metrics), pointing to health and education, welfare
supports, minimum wage settings and full employment policy as levers for
entrenched disadvantage, while correctly noting that particular levers must be
context-specific. Indigenous Australians were not, as far as I can tell,
explicitly mentioned.
In
August 2024, then-Commissioner Natalie Siegel-Brown put the data more starkly (link
here):
Another five of the targets are
improving but not on track to be met, one has not progressed at all, and four
targets are actually going backwards … government performance on reducing rates
of removal of children from their families, adult imprisonment, children in
detention and suicide is even worse than when we started measuring … this
coincides with some states knowingly contravening their commitments under the
Agreement.
In
a November 2024 speech (link here),
Commissioner Wood described the first Review's consultation with Indigenous
communities as central to its ‘success’. Given the dismal outcomes to date, and
the slow progress in implementing the Commission’s recommendations, the assertion
of ‘success’ appears misguided and Panglossian.
The
two Commissioners now responsible for the current Review, Selwyn Button and
Angela Jackson, struck a similarly optimistic note in an article earlier this
year (link here). In August 2025,
Commissioner Button wrote an op-ed in the AFR (link
here) extolling community control as the key to closing the gap. His
argument downplayed the impact of FASD by pointing to successful community-led
initiatives such as had taken place in Fitzroy Crossing, and, on alcohol, cited
national data against what he termed "lazy stereotypes." Yet the
outcomes on the ground continue to take a terrible toll (link
here: my own analysis, not official data), and "strength-based"
arguments risk taking pressure off governments to strengthen controls on access
to alcohol and other harmful substances for vulnerable remote residents.
Community control is arguably a necessary contributor to achieving many of
the Closing the Gap targets, but (especially at the macro-level) it is not sufficient
on its own; that control must translate into effective and sustainable policy
which increasingly encompasses engagement with other interest groups, negotiation
and trade-offs with multiple levels of government, effective advocacy and
sustained cohesion so as to resist the countervailing efforts of governments
and third parties to undermine Indigenous voices.
There
is clearly a place for rigorous monitoring and data contextualisation, but it's
far from clear the Commission has been applying that rigour in the Indigenous
policy space. Economist and former Commission employee Cathal Leslie has
published a number of op-eds on Closing the Gap in the AFR (link here: paywall) one of
which apparently prompting Commissioner Button's article above, another on 10
August 2026 pointing to methodological issues in the Commission's target
metrics and to a critical ANAO report and a commissioned ANU report. Leslie's
central point is the Commission's downplaying of demographic change in the
national Indigenous population — the statistically significant rise in people
self-identifying as Indigenous — and he concludes that the Commission has
chosen to present statistics it knows cannot be believed, giving ‘cover to
failing policies by telling the country that life for Indigenous children is
better than it is.’ While I am not privy to the Commission’s internal
processes, and so don’t presume to take one side or the other, the methodological
and data issues raised by Cathal in a credible national newspaper deserve to be
taken seriously by the Commission in its substantive analysis to be published
in the forthcoming review.
Déjà vu all over again
The
fundamental problem with the terms of reference, and with the Commission's
recent signalling of its likely approach, is that it is, to borrow from Yogi
Berra, ‘a case of déjà vu all over again.’
In
December 2022, following a call for submissions to the first three-year review,
I submitted a nine-page submission to the Commission (link
here). In August 2023, I published a blog post critiquing the Commission's
draft report (link
here). In September 2023, I submitted a further response (link
here), attaching an outline of a potential alternative framework for
Closing the Gap. All three failed to gain obvious traction. Rereading them
today, I think they made a very strong case then and still do. The concluding
paragraphs of the 2023 post included:
There is no recognition that the current
design architecture for the agreement, while incomplete and thus subject to
ongoing remedial work, is simultaneously over-designed and in need of radical
simplification. As presently configured, it guarantees that the Coalition of
Peaks will be wading through bureaucratic sludge for the next ten years … and
ensures that the probability of the national agreement imploding under the
weight of its accumulated complexity is high and bound to grow. Proactive
reform is preferable to stasis followed by abolition.
The bottom line … is that the six
recommendations of the draft review … would not make any substantive difference
to the nation's progress on closing the gap within five or even ten years. They
are an amalgam of doubling down on the current hyper-complexity of the policy
architecture along with a hefty dose of blind faith in the bureaucratic
leadership of the nation. Did the robodebt royal commission not make any
impression at all on the PC?
My
recommendation for the Commonwealth Government remains the same: issue the
Commission with revised terms of reference, and ask it to (a) estimate the cost
of addressing entrenched Indigenous inequality; (b) map out a realistic
timeframe and strategy for achieving that objective; (c) undertake a more
fundamental analysis of the current status of the Closing the Gap architecture;
and (d) provide options for radically simplifying the structure and design of
that architecture while retaining the four priority reforms. And, for good
measure, keep it to fifty pages. Such a report could create a pathway for the Commonwealth
Government, which in reality and despite its dissembling, retains primary responsibility
for the effectiveness and long term viability of the National Agreement, to engage
meaningfully with Indigenous interests and the states and territories.
The bottom line
The
Productivity Commission has an admirable and long record of real and forthright
independence, most recently on the GST and fiscal equalisation. What's needed
now is hard-headed policy analysis focused on making a tangible difference to
the lives of the most disadvantaged Australians within a finite period. The
Commission is not primarily responsible for the poor outcomes to date, but its
inability so far to identify a feasible, constructive strategic pathway forward
for the National Agreement and its constituent parties has been a major
contributor to letting governments evade real accountability to the public and
to First Nations.
If
it were up to me, I would favour narrowing the focus of the National Agreement
to the five issues identified by Coalition of Peaks Lead Convenor Ms Donnella
Mills who in her comments in response to the Terms of Reference (link
here) argued inter alia:
Positive outcomes are achieved when
governments have genuinely partnered with Aboriginal and Torres Strait Islander
community‑controlled organisations, it is now up to all governments to
demonstrate and lead the change our people have said is needed to shift the
dial in areas of health, housing, education, employment and justice (emphasis added).
I
would add to those proposed priorities the adoption of a robust needs-based funding
criterion to ensure that geographic areas or program sectors without access to appropriate
mainstream program equivalents are prioritised.
It's
now almost a quarter of a century since the Rudd Government adopted the Closing
the Gap agenda. The patchy progress that has been achieved owes more to wider
economic and demographic shifts than to specific policy reform, and in many key
areas — especially remote Australia — progress in many respects has been
negative. Without a new approach, which in my view will only emerge if the
Commission bites the bullet, the National Agreement, which I still see as
pathbreaking reform of historic significance, will be vulnerable to abolition.
Without a sense across the breadth of mainstream Australia that Closing the Gap
is working, the framework will lose the broad-based political support necessary
for its ongoing survival.
The
work of the forthcoming Review, and its ability to persuade governments to
pursue substantive reform, may well be the last real opportunity to ensure the National
Agreement and Closing the Gap does not go the way of the NAC, the NACC, ATSIC
and the Voice to Parliament, and becomes a mere footnote in the history of the
ongoing struggle for inclusion within the nation’s institutional architecture
by First Nations citizens. That would be a tragedy for First Nations, and for
the nation.
1 September 2026
This post has benefited from
editorial assistance from Claude Sonnet 5. The text and arguments are entirely
my own.
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