The organisation with the biggest national database of First Nations businesses has supported the federal government's plan to strengthen eligibility criteria under its Indigenous Procurement Policy.
Under the Policy (IPP), a First Nations company is defined as a business with at least 50 per cent Indigenous ownership, but eligibility criteria for Indigenous businesses to access the IPP will be reviewed after a public consultation process.
Indigenous business organisation Supply Nation, which was recently criticised by First Nations academic Gningala Yarran-Mark for not doing enough to weed out businesses engaging in black cladding, said a new definition would help combat the practice - where a company establishes a facade of Indigenous ownership to fraudulently win lucrative government contracts.
Since the IPP was introduced in 2015, around $1.6 billion has been awarded to Indigenous companies but many Aboriginal businesses believe the system is being rorted.
Supply Nation CEO Kate Russell said her organisation had long advocated for a tightening of eligibility criteria, as well as expected changes that would dictate Indigenous-owned businesses are managed and controlled by First Nations people.
"Including standards of management and control will only strengthen the Indigenous economy and increase confidence in Indigenous business," Ms Russell said.
While black cladding was not widespread, any incident was damaging to Indigenous businesses.
"Black cladding robs genuine Indigenous businesses of opportunities and damages the reputation of the vast majority of our businesses that are doing the right thing," Ms Russell said.
Supply Nation said it would work with the Albanese government to ensure any changes would allow its 4300-plus registered businesses to transition smoothly.
"There is very little time to participate in the consultations, so we urge businesses to read the discussion paper, complete the survey and make a submission as soon as possible," she said.
Supply Nation was one of the few organisations in Australia verifying if businesses were majority-owned and controlled by Indigenous people after a Parliamentary report on Indigenous Employment and Business in September 2021 suggested it refine its criteria for an Aboriginal business, to help prevent practices such as black cladding.
The Standing Committee on Indigenous Affairs' Report on Indigenous Participation in Employment and Business made 17 recommendations aimed at eliminating black cladding and enhancing the effect of the Indigenous Procurement Policy on Indigenous communities.
Ms Yarran-Mark told the National Indigenous Times last week that Supply Nation was essentially relying on Aboriginal businesses to be their own regulators in that space.
"We have the ACCC (Australian Competition and Consumer Commission) that protects large body corporates from the deceptive behaviours that go on in the corporate space," she said.
"Supply Nation doesn't have the kind of powers or authorities to assert any control over what they've been fed, to decide as to 50 per cent [ownership] or 51 per cent, but that doesn't determine an Indigenous business," she said.
The consultation period ends on March 1, 2024, with a discussion paper, online survey and submission details available online.