Labor’s national platform to change definition of an ‘Indigenous business’ to stop rorting

Labor will move to change the definition of an ‘Indigenous business’ to clamp down on companies falsely claiming to significantly involve Aboriginal Australians in their leadership.

The Australian understands the national draft platform amendment seeks to introduce a threshold on the portion of Indigenous people in a company’s workforce, on top of its ownership. Picture: Getty Images

Labor will move to change the definition of an “Indigenous business” to clamp down on companies falsely claiming to significantly involve Aboriginal Australians in their leadership and workforce, in a bid for lucrative government funding.

The final version of Labor’s draft national platform has been amended to outline the ambition to change the definition of an Indigenous business. “Labor believes what constitutes an Indigenous business should be redefined to protect against ‘black cladding’ and ensure meaningful employment for Indigenous workers, and will support states and territories to adopt a similar definition,” the draft says.

“Labor is committed to finding opportunities that ensure Aboriginal and Torres Strait Islander workers have well-paid, secure and ongoing employment.”

The practice of black cladding occurs when a company is set up to make it look like Indigenous people are involved when in reality there is little involvement of Aboriginal or Torres Strait Islander people beyond the facade created. According to the federal government definition, an Indigenous business constitutes an organisation with at least 50 per cent Aboriginal or Torres Strait Islander ownership.

Under current policy, 3 per cent of all federal contracts must be awarded to companies categorised as an Indigenous business, resulting in more than $1bn in contracts being awarded to Indigenous companies since 2016.

The Australian understands the national draft platform amendment seeks to introduce a threshold on the portion of Indigenous people in a company’s workforce, on top of its ownership.

Labor’s national platform – to be debated at the conference in Brisbane this month – binds the party to policies laid out in the document.

Supply Nation, the peak body for registering Indigenous businesses nationally, has been raising the issue of black cladding for years and confirmed it had received 27 complaints about the practice since 2018. Of those, two were still under investigation.

A spokeswoman for Supply Nation – which keeps a database of more than 4300 verified Indigenous businesses – said it had long advocated for changes to federal Indigenous procurement policy. “In the past 12 months we have removed over 250 businesses from our database for criteria noncompliance, including insufficient Indigenous ownership.

“Black cladding threatens to undermine the great success of the Indigenous business sector – which has grown by 62 per cent in the past year. Very few Indigenous businesses are black-clad, but the reputation of all can be damaged by the handful of bad apples.”

The powerful CFMEU construction union raised the alarm over black cladding earlier this year, which it called “the biggest rort”. The CFMEU’s Koori organiser, Joel Shackleton, said the practice was “happening everywhere”, and the union has called for the establishment of a government-funded Aboriginal Construction Board of Integrity in Victoria to stamp it out.

The Australian Competition & Consumer Commission said it was against Australian Consumer Law for businesses “to make false or misleading claims or engage in conduct that is misleading or deceptive” but it had not taken any enforcement actions in relation to black cladding.

“The ACCC has received few if any complaints that could be described as ‘black cladding’. However, the ACCC prioritises the investigation of alleged breaches of the Australian Consumer Law and Competition and Consumer Act where the conduct impacts or targets First Nations Australians,” a spokesman said.