The federal government introduced legislation this week to expand the role and remit of Indigenous Business Australia, as part of the Future Made in Australia (Production Tax Credit and Other Measures) Bill 2024.

The Bill amends legislation to allow IBA to borrow and raise capital, with the aim of boosting its ability to invest in First Nations businesses and communities.

In a joint statement on Monday, Minister for Indigenous Australians Malarndirri McCarthy and Treasurer Jim Chalmers said the government is improving access to capital because it is "a significant barrier" to First Nations economic development and empowerment.

The minister said the legislative change "supercharges" IBA's ability to inject finance into activities that can foster "greater economic empowerment, self-determination and better life outcomes" for First Nations people.

The change will allow IBA to partner with private and government entities to deliver programs for First Nations ventures, deploying "significantly greater amounts of finance and investment".

Senator McCarthy and Mr Chalmers said the amended laws will give the IBA the ability to support more First Nations people to start, grow and sustain businesses, purchase homes, and invest in commercial ventures.

"Current legislative restrictions on IBA borrowing and raising funds limit its ability to leverage capital for co-investment arrangements," the ministers said.

"The Bill contains appropriate guardrails to allow IBA to pursue these co-investment and partnership opportunities in a safe way, determined by rules prescribed by the Minister for Finance."

Senator McCarthy and Mr Chalmers said modernising IBA's borrowing powers will provide the flexibility and certainty required to commercially structure investments that support and promote First Nations economic self-determination.

The legislative pivot followed this month's detailed report by the IBA that, while lauding the increased economic contribution (more than 50 per cent) from the Indigenous business sector between 2016-2021, highlighted concerning policy shortfalls to its expansion, despite First Nations business growth outpacing non-Indigenous entities the past decade.

The research by IBA and Australian National University experts showed the sector's rapid expansion was hampered by little capacity-building support, with start-ups and developed businesses challenged by access to suitable funding to meet growing demand.

The report found capacity constraints for mature businesses centred on demand challenges – with limited penetration into national and international supply chains and big business networks; and supply issues – not having access to sufficient, appropriate and timely sources of capital and business support, to meet expansion needs when demand is confirmed.

For most of the four per cent of 'large' First Nations businesses (those with more than 20 employees), accessing significant capital between $50m-$100m was not available, either through IBA funding or other institutions.

Several entrepreneurs told researchers government policy implementation and bureaucratic burdens were significant barriers to growing successful enterprises, with one business owner describing working with government as akin to "trying to turn an aircraft carrier around".

Noongar Chamber of Commerce and Industry CEO Tim Milsom said it was vital the 600-plus Aboriginal businesses it helps increase their economic participation and output – and others across Australia – were meaningfully supported to adapt to fast-changing business environments.

"We have seen a huge growth in the sector... it has transformed communities and changed perceptions, recognising its increasing contribution and impact on the economy, in a very short space of time," he said.

"But it's important to build the capacity skills and resources of First Nation businesses,. so they are equipped to adapt to fast-changing business environments."

No industry is changing faster or has so many unknowns than the renewables sector, with the global clean energy race to net zero emissions by 2050 requiring significant Indigenous consent and partnerships.

The Western Australian government this month announced $3 million in grants (to a maximum of $100,000) for 30-plus eligible Pilbara organisations to engage in the clean energy transition.

Yindjibarndi community leader Michael Woodley – CEO of the Yindjibarndi Aboriginal Corporation which has been a proactive renewables player in the Pilbara – said the new state funding was a sign governments were realising First Nations involvement as co-partners or key drivers in the renewables transition "was a given".

"One of the major keys to success [in the transition] is capacity building," he told our publication.

"We must insist that is part of the framework, of having a successful model; proper investment in capacity building."

Recent Net Zero Australia modelling estimated 43 per cent of all clean energy infrastructure required to meet this target would need to be on Indigenous lands and sea.

Swinburne University of Technology and the University of Tasmania research earlier this year showed glaring inclusion gaps in Australia's strategies were impeding our low-emission approach.