New modelling lodged with the Productivity Commission on Wednesday shows =workplace racism could be costing Australian employers between $604 million and $1.21 billion a year in Indigenous staff turnover.

Key points

• The 19-point gap costing Australian business up to $1.21 billion a year
• Why the average Indigenous worker could finish a career close to $1 million behind
• At the current rate, it takes another 118 years to clear racist jokes out of Australian workplaces

The UTS Centre for Indigenous People and Work (CIPW) included the modelling in its submission to the Commission's 2026 review of the National Agreement on Closing the Gap. The submission also includes a second estimate: the pay gap and unpaid cultural work could leave the average Indigenous employee $908,468 behind over a 45-year career.

CIPW Director Professor Nareen Young said the findings put racism at the centre of the national economic conversation.

"Australia is in a productivity debate right now, and this is a productivity story. Every Indigenous worker who leaves a job because their workplace isn't safe takes their skills and experience with them, and employers have to pay to replace them," Professor Young said.

"The potential costs of inaction are eyewatering, but they signal an important opportunity for Indigenous employees and Australian businesses."

The employer figure comes from CIPW's Gari Yala 2 survey of 1,158 Aboriginal and Torres Strait Islander workers. Among respondents who experienced racism at work sometimes, often or very often, 26 per cent said they were very likely to make a genuine effort to find another employer in the next year. Among those who never or hardly ever experienced racism, the figure was seven per cent.

CIPW applied that 19 percentage-point gap to an estimated 321,400 Indigenous employees nationally. Its central scenario assumes half the workers with that extra intention to leave actually go, which comes to about 17,679 more departures a year. At a replacement cost of between half and a full year of average Indigenous income, employers would pay $604 million to $1.21 billion. Across the full range of assumptions tested, the cost runs from $302 million to $1.81 billion.

Indigenous Business Australia reviewed the modelling.

The worker-side estimate draws on Towards Indigenous Pay Parity, the joint CIPW and IBA report that found Aboriginal and Torres Strait Islander employees earn 84 cents for every dollar earned by Australian workers overall.

That gap amounts to $15,041 a year, or $676,845 over a 45-year working life. CIPW then added the cultural work Indigenous employees take on outside their job descriptions, such as educating colleagues, running Reconciliation Action Plans and organising cultural events. Respondents in mainstream organisations reported an average of 2.38 unpaid hours a week, worth $5,147 a year and $231,623 across a career.

The $908,468 total leaves out superannuation, so the lifetime cost could be higher.

CIPW Assistant Director Josh Gilbert said the losses spread across other Closing the Gap targets.

"Employment numbers are improving, but that can't be sustained without addressing systemic racism and inequality that keeps Indigenous pay down and makes some workplaces unsafe," Mr Gilbert said.

"Lower average income limits access to appropriate and affordable housing and quality healthcare, dragging down progress on those targets, while the distress of negative workplace experiences weighs heavily on the social and emotional wellbeing target too."

Professor Young said the cost lands on more than individual pay packets.

"The economic hit is two-fold, with Indigenous employees carrying a shortfall of close to a million dollars over a career. That is income that never reaches Indigenous households, never gets spent in local economies and never compounds into savings or home ownership," she said.

Gari Yala 2 found 58 per cent of Indigenous employees experienced racism at work at least sometimes. Between the 2020 and 2025 survey waves, most forms of racism fell by two to five percentage points. The share of workers hearing racial slurs or jokes dropped from 44.2 to 40.2 per cent. CIPW estimates that at this rate of improvement, it would take another 118 years before every Indigenous worker reports never hearing them.

The survey also shows what works. Where workplaces had neither anti-discrimination training nor a formal racism complaint procedure, 66 per cent of Indigenous employees experienced racism. With one measure in place, that fell to 56 per cent. With both, it fell to 40 per cent.

The submission makes six recommendations. They include adding the Indigenous Pay Gap as a national Closing the Gap metric, measuring job quality alongside participation, and amending the Racial Discrimination Act 1975 to require employers to take reasonable and proportionate steps to prevent racial discrimination and harassment. The duty would follow the model already operating under the Sex Discrimination Act.

CIPW presents both figures as illustrative scenario estimates and says they should not be added together.

"Legislating a positive duty would provide a clearer framework for businesses to take reasonable and proportionate action before problems escalate," Professor Young said.

"It would lead to better outcomes for Indigenous people, stronger workplaces, and greater productivity."