Indigenous businesses close gap but black cladding distracts positives

Kate Russell

Mar 18, 2025 – 8.39am

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The Indigenous business sector contributes around $16 billion to Australia’s economy annually and is doing all it can to help close the gap, supported in part by the Indigenous Procurement Policy (IPP).

For this to continue, it is crucial that we maintain public confidence in the integrity of the IPP, including when it comes to questions about something called “black cladding”.

Supply Nation defines black cladding as the practice of a non-Indigenous business entity or individual shareholder in the business, unfairly gaining access to otherwise inaccessible Indigenous policies or contracts.

This could include arrangements that disadvantage the Indigenous party, or that do not represent a genuine and equitable partnership or benefit.

These practices and what amounts to fraud can be managed and mitigated.

And that’s a core function of Supply Nation, to verify Indigenous-owned businesses. In other words, verify that they are what they say they are – 50 per cent or more Indigenous owned.

Last year alone Supply Nation facilitated $4.6 billion in procurement spend from our member organisations to verified Indigenous suppliers.

That’s a powerful figure and one that leads to real and positive social outcomes.

The recent announcement by the Prime Minister in his Closing the Gap speech requiring businesses which register for Commonwealth procurement to be 51 per cent or more Indigenous-owned and controlled is timely.

The sector has matured since the establishment of the IPP in 2015, and Supply Nation has long upheld our own standard that goes further to include management of the business.

Indigenous businesses are creating jobs and value in all sectors of the Australian economy from energy to construction, satellite communications to cybersecurity, cryogenics to cookies, tunnelling, T-shirts, tourism, native botanicals, hospitality, retail, cutting edge fashion, aerospace and the creative industries, you name it, we will have a supplier who has it.

All Australians should take pride in the achievements of Indigenous businesses who are not only closing the gap but significantly contributing to the Australian economy.

However, their success and contributions are often overshadowed and obstructed by the attention given to black cladding.

Achievements are further obscured by different and loudly vocalised interpretations of what black cladding is, and what it is not.

Just because a business doesn’t employ Indigenous staff doesn’t mean it is black cladded.  Just because a business is not 100 per cent Indigenous owned, doesn’t mean it is black cladded.

Businesses that choose to have equal partnerships as an Indigenous joint venture are not automatically indulging in black cladding trying to deceive.

Like all successful businesses, Aboriginal and Torres Strait Islander business owners and entrepreneurs will choose the model that gives them the best chance of success in a competitive market.

That would seem obvious to most in business, but it’s not always as straightforward as it may seem. Intentions are often questioned and more scrutiny levelled at Indigenous businesses than at other organisations.

Supply Nation gives procurement professionals and the business they represent, confidence that they are dealing with verified Indigenous businesses. We are not a silver bullet. Our verification processes should not dissuade businesses from undertaking their own checks and due diligence, just as they would with any other entity, to mitigate exposure to risk.

We all have a role to play in preventing black cladding.

While Supply Nation provides the first line of verification, the procuring agency must take whatever steps necessary, in line with their internal processes, to assure themselves they are engaging with a true Indigenous business.

There are steps outlined in the IPP and publicly available through the National Indigenous Australians Agency (NIAA) website that guide procurement professionals as to what is required.

We cannot let the sensationalism associated with the term “black cladding” continue to demean the success and significant contribution Indigenous businesses are making to maintaining growth and prosperity across Australia’s economies.

In my role I am privileged to see over 5500 genuine Aboriginal and Torres Strait Islander-owned businesses on our Indigenous Business Direct database making a tangible difference to their families and communities.

If there are suppliers posing as Indigenous or using a front, we will investigate and make sure they are held accountable.

If there are organisations or individuals selling snake oil to capitalise on the misinformation associated with black cladding, they should also be held accountable.

If the media, for its own ratings, overstates or conflates the issue, they need to be held accountable and judged according to their publicised standards and codes of conduct.

Only by maintaining high standards of accountability and working together can all Australians benefit from a growing, sustainable and vibrant Indigenous economy that is making a real difference to closing the gap.

Ending the practice of black cladding will make sure everyone really gets a fair go.

Kate Russell is a proud Awabakal woman and CEO of Supply Nation.