An Audit Office investigation of federal contracts has found Indigenous employment rules were dropped in two thirds of cases, translating to $70 billion worth of contracts not being required to meet the minimum number of Indigenous staff hired or use Indigenous businesses.
The ABC has revealed the auditors found almost 70 per cent of recorded contracts since 2016, or about 1,475 contracts, were exempted from requirements for at least three per cent of the workforce to be Indigenous, or that amount of components sourced from Indigenous-owned businesses.
Auditors said contract exemptions were increasing, and while some were legitimate exemptions, others were given with little explanation, the ABC reports. Of those contracts that were exempted from Indigenous participation rules, one third listed their reason for exemption under the category "other".
"The inappropriate use of exemptions impedes achievement of the Indigenous Procurement Policy's objectives… Systems have been set up to allow potentially invalid exemptions," the auditors said.
The auditors also found that of those contracts that were subject to Indigenous participation rules, only one in five was assessed for compliance, and 28 per cent of those assessed were found to be in breach of the requirements, the ABC reports.
Indigenous participation rules are applied to federal government contracts if they exceed $7.5 million in value and more than half of that value is spent in a nominated industry in Australia — such as in construction, healthcare, industrial cleaning or wildlife management.
The responsible agency, the National Indigenous Australians Agency, told the auditors that contracts were sometimes exempted because they were "in practice non-compliant" with the rules.
The auditors found the NIAA had not updated its guidance to contractors on navigating Indigenous participation rules since July 2020, despite reporting requirements changing in that time, the ABC reports.
The Agency agreed to review its use of the "other" category for allowing exemptions, but argued it was the responsibility of Commonwealth departments to ensure each met their own obligations.