Progress toward Closing the Gap targets in schooling and early childhood development is being undermined by reporting gaps, limited funding transparency and incomplete place-based partnerships, a new performance audit has found.
While the audit, led by the Australian National Audit Office (ANAO), concluded partnership arrangements and funding design under the National Agreement on Closing the Gap (National Agreement) are largely effective and improving, it warned transparency around progress has declined, making it harder to track results and hold governments to account.
Released late last month, the audit examined three targets under the National Agreement: Target 3 — increasing preschool enrolment for Indigenous children; Target 4 — improving children's developmental outcomes; and Target 5 — increasing Year 12 or equivalent attainment rates.
As of June 2025, Target 3 was assessed as improving and on track to be met, Target 4 was worsening, and Target 5 was improving but remained off track.
It found governments are increasingly applying National Agreement principles to funding arrangements, but said greater alignment is needed; particularly to ensure more funding reaches Aboriginal community-controlled organisations (ACCOs).
"Partnership arrangements and funding design activities for schooling and early childhood development commitments under the National Agreement... are largely effective and improving," the audit said.
"In the area of schooling and early childhood development, Australian Government entities are increasingly working in partnership with First Nations people in designing policy."
However, the ANAO report also pointed to a "declining level of transparency over progress towards related Closing the Gap targets," including limited visibility over how federal funding agreements support ACCOs.
"Relevant grant programs are partly aligned with the Closing the Gap principles, with deficiencies in how grant funding is used to support Aboriginal community-controlled and other Aboriginal and Torres Strait Islander organisations," it said.
Place-based partnerships lag behind
While the Early Childhood Care and Development Policy Partnership (ECCDPP) was found to align well with the National Agreement's "strong partnership" elements, the audit noted that required place-based partnerships have not yet been fully established, and evaluation of policy partnerships remains incomplete.
"Requirements for the Australian Government to report on the success of policy and place-based partnerships have not been met," the audit added.
The ECCDPP is a shared decision-making forum between First Nations communities and governments aimed at improving early childhood outcomes for Aboriginal and Torres Strait Islander children and families.
Responding to the findings, SNAICC - National Voice for our children described the ECCDPP as a "clear example of what a successful policy partnership looks like", pointing to both "the way it was established and implemented" and the outcomes it has delivered in early childhood education and care.
"When we talk about Government working differently with Aboriginal and Torres Strait Islander communities, the ECCDPP is a meaningful and advanced illustration of what that means," a SNAICC spokesperson told National Indigenous Times.
Despite progress, the organisation said more work is needed to "better align mainstream federal funding agreements" with the National Agreement's priority reforms.
"There remains a lack of transparency in how federal funding agreements support Aboriginal community-controlled organisations, with relevant grant programs only partly aligned and deficiencies in how funding is used to support Aboriginal and Torres Strait Islander organisations," the spokesperson said.
Recommendations
The ANAO called for annual reports to provide clearer information on policy and place-based partnerships, including how many are operating, their progress, and the outcomes achieved.
It also recommended the government publicly report how much funding — and how many grants — are directed to ACCOs and other First Nations organisations, and advised the Department of Education to track and evaluate the proportion of its grants going to those groups.
Finally, the audit called on the annual Closing the Gap annual reports — scheduled to be released by the federal government next week — to be more complete and meaningful by drawing on Productivity Commission data and clearly outlining target results, risks, successes, failures and lessons learned.
