Supporters of Australia’s Indigenous Procurement Policy (IPP) are calling for tighter verification processes and broader participation in response to concerns about fraudulent operators, concentrated contract flows and limited transparency across the $13.4 billion scheme.
Introduced in 2015, the IPP has awarded more than 84,000 contracts to more than 4,600 Indigenous businesses, but has long faced scrutiny.
Under planned reforms from the federal government, the target for Indigenous procurement will increase from 2.5 percent to 3 percent of all government contracts from 1 July 2026, while suppliers will need to be at least 51 percent Indigenous-owned to qualify.
However, according to The Australian, some of the policy’s original architects say additional reform is urgently needed to protect the integrity of the scheme and ensure benefits are spread more evenly across Indigenous enterprises.
Aboriginal entrepreneur Warren Mundine, who helped establish the IPP while advising former prime minister Tony Abbott, remains supportive of the program but says the policy risks becoming concentrated among a relatively small group of suppliers.
“We have got to be very careful about people setting up cartels, getting together and making sure they get all the contracts. That looks dangerous for us,” he told The Australian.
“How do we get the policy to a point where people can come in and then move out of it? Because that’s what we want.
“We want a policy that helps people move through. I don’t think people need to be scared and threatened by it. It opens it up for more people.”
Mundine said the original intent of the policy was to support a broad pipeline of Indigenous small businesses and encourage more Indigenous entrepreneurs to enter the market, rather than create a long-term protected revenue stream for larger firms capable of competing without policy support.
Former Indigenous Australians minister Ken Wyatt has also backed stronger compliance measures, notes The Australian, particularly regarding “black cladding”, where businesses are alleged to misrepresent Indigenous ownership structures to access procurement opportunities.
Last year, Wyatt sent a letter to Prime Minister Anthony Albanese and Indigenous Australians Minister Malarndirri McCarthy, urging the federal government to adopt tougher independent verification measures.
“The extent of black cladding in Indigenous business today is so profound it has infiltrated most areas of the sector, including the Aboriginal business chambers,” he wrote.
“The verification process must be independent and governed by Chartered Practising Accountant professional standards, while expanding the assessment of authenticity and ownership from multiple perspectives.
“I cannot understate the importance of the IPP in closing the gap for Aboriginal people and creating a wealth basis. It is therefore of critical importance that the model we adopt to verify authentic businesses is beyond reproach.”
This fresh scrutiny follows recent analysis by Australian National University researcher Christian Eva, who examined the first eight years of the IPP.
He found that half of all contracts over $10,000 were awarded to just 11 organisations, while 18 businesses accounted for 50 percent of the total value of all contracts.
Canberra stood out as a particular hotspot, accounting for more than 40 percent of the number and 30 percent of the value of contracts awarded.
Eva also discovered that Indigenous ownership information was unavailable for 64 percent of suppliers awarded contracts between July 2015 and June 2023.
These suppliers went on to secure contracts worth approximately $1.9 billion, representing 27 percent of the $7 billion spent through the IPP during the eight-year period.
Backing Wyatt and Mundine’s stance, additional research from University of Queensland Lecturer Gaala Watson found the IPP needs additional reforms, all of which boil down to better oversight and public accountability.
Pointing to the millions of dollars lost to businesses that misrepresent themselves as Indigenous, Watson argued that the IPP needs stronger protections and penalties, including robust whistleblower protections and enforceable consequences to ensure real accountability.
She also examined the need for an independent investigative arm – staffed with cultural and commercial experts – to properly investigate fraudulent claims of Indigeneity, as well as a process for cross-checking claims through community-controlled bodies or cultural authorities.
Separate concerns have also emerged this week from Indigenous business leaders, who argue that the debate around procurement integrity should not overshadow the need for deeper, long-term partnerships and business development support.
At a recent roundtable in Perth hosted by Mineral Resources (MinRes), Aboriginal business owners, corporate executives and finance representatives warned that procurement targets alone were insufficient to build sustainable Indigenous enterprises.
MinRes’s Aboriginal Business Development Manager, Ashley Carey, said companies needed to remain engaged with Indigenous suppliers beyond awarding contracts, including through operational support, financial oversight and capability-building measures.
“We don’t just set and forget,” he said at the roundtable.
“We attend quarterly financial reviews, we look at cash flow projections, and we work with them on site to make sure they’re supported operationally.
“It’s a labour-intensive process, but it’s the only way to get proper outcomes.”
Meanwhile, Shelley Cable, Head of First Nations Strategy at ANZ, said organisations need to consider whether Indigenous procurement was being pursued simply to satisfy spending targets or to generate genuine economic and social outcomes for Aboriginal businesses and communities.
“Are you procuring from First Nations businesses because of a spend target?” she said.
“Or is it because you want to contribute to a social outcome? Your approach needs to reflect your intent.”
The comments reflect a growing view within the sector that procurement policy should evolve from simply meeting targets to fostering sustainable Indigenous-owned businesses capable of long-term growth without ongoing reliance on government policy.
