The federal government has moved to strengthen "the ambition" and eligibility requirements of the Indigenous Procurement Policy (IPP), to "help ensure economic benefits are flowing to First Nations people as intended", Minister for Indigenous Australians Malarndirri McCarthy announced early on Wednesday.
Under the updated eligibility criteria, businesses wanting to access Commonwealth contracts under the IPP will need to be 51 per cent or more First Nations owned and controlled (up from 50 per cent); or registered with the Office of the Registrar of Indigenous Corporations.
There will be a transition period from Wednesday, 1 July 2026, to support businesses to understand the eligibility changes, review their arrangements and take the necessary steps to ensure they align with the new requirements.
Also from July 1, the target for the Commonwealth and portfolios to buy from First Nations businesses has increased to 3.25 per cent. The target will continue to increase by 0.25 per cent each year until it reaches four per cent by 2030.
Senator McCarthy said strengthening the Indigenous Procurement Policy "is about ensuring First Nations people are not just participating, but genuinely leading and benefiting from the success of IPP contracts".
"By moving to a 51 per cent ownership and control requirement, we are backing First Nations entrepreneurs to exercise full authority over their businesses," she said.
"This approach balances certainty with opportunity, ensuring the IPP continues to deliver real economic empowerment and lasting outcomes for First Nations businesses."
The changes comes in the midst of serious concerns around the tactic of Black cladding - which entails businesses that are not genuinely Indigenous-owned and controlled exploiting First Nations identity to gain access to procurement opportunities, funding, or other benefits designated for the economic growth of Aboriginal and Torres Strait Islander enterprises.
Since 2015, the IPP has seen more than 91,000 federal contracts worth over $14.2 billion awarded to more than 4,900 First Nations businesses.
However, a number of Indigenous businesses and business peak bodies have voiced doubts regarding other federal "economic empowerment" measures and the pace of reform.
In August last year, the Australian National Audit Office found that between 2016 and 2023 the majority of large federal contracts designed to support Indigenous employment and enterprise had failed to comply with core requirements of the IPP, raising concerns over oversight, exemptions and accountability within the National Indigenous Australians Agency. 1,475 federal contracts in that period, with a combined value exceeding $70 billion, were granted exemptions from the Indigenous participation requirements.
The federal government said in a statement on Wednesday the changes coming into effect July 1 will help ensure First Nations people are "empowered to run their businesses and exercise their rights as majority owners, supporting economic self-determination".
