Labor Lifts Quota for Aboriginal Government Contracts, Tightens Rules

An Aboriginal flag is seen through the crowd at the “Stop Black Deaths In Custody” march in Perth, Australia on Oct. 7, 2023. Matt Jelonek/Getty Images

The Australian government is tightening legislation around which businesses can access billions of dollars in Commonwealth contracts under its Indigenous Procurement Policy (IPP).

The move is aimed at cracking down on so-called “black cladding,” which relates to businesses pretending to be Aboriginal-owned in order to win government contracts despite Aboriginal people having little real control or financial benefit.

Under the new legislation, businesses seeking to win government tenders will need to be at least 51 percent Indigenous-owned or controlled, and be registered with the Office of the Registrar of Indigenous Corporations.

A transition period began on July 1, and will provide businesses time to review their ownership structures.

The government has also lifted the quota of Commonwealth contracts expected to go to Indigenous businesses.

The target has risen from 3 percent to 3.25 percent and will increase by 0.25 percentage points each year until reaching 4 percent by 2030.

The IPP was first introduced in 2015 under the Abbott Liberal government to increase economic opportunities for Aboriginal businesses.

According to government figures, more than 91,000 Commonwealth contracts worth over $14 billion have been awarded to 4,900 Indigenous businesses since then.

Indigenous Minister Malarndirri McCarthy said the changes would ensure Aboriginals were “not just participating, but genuinely leading and benefiting” from government contracts.

“By moving to a 51 percent ownership and control requirement, we are backing First Nations entrepreneurs to exercise full authority over their businesses,” she said in a statement.

“This approach balances certainty with opportunity, ensuring the IPP continues to deliver real economic empowerment and lasting outcomes for First Nations businesses.”

In 2024, Indigenous representatives called for Aboriginal businesses to be at least 50-percent owned by Aboriginal people in order to benefit from government tender work.

Supply Nation CEO Kate Russell was one such representative who had urged the changes during a Senate Committee inquiry into economic self-determination for Indigenous Australians.

“The great majority of Indigenous businesses are doing the right thing,” she said.

“And I do not want to create a situation where a few bad apples spoil the whole bunch.”

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