Wyatt calls for Indigenous Procurement Policy to be shut down if ‘black clad’ rorts continue
The federal government should close the current Indigenous Procurement Policy if the ‘black coating’ problems that prevent genuine Aboriginal businesses from doing business are not addressed, according to former Aboriginal affairs minister Ken Wyatt.
The former member for WA’s federal seat of Hasluck believes legitimate Aboriginal-owned companies are losing out to ‘black-clad’ companies setting up joint ventures with Indigenous partners to qualify and win Commonwealth contracts designed to encourage Indigenous entrepreneurship.
“If this is happening, something needs to be done. Or alternatively, the government needs to shut down the program,” said Wyatt.
He added that there was a proliferation of ‘false flag’ businesses with local partners.
“The black wrap means I can partner with a white-owned company, and they pay me to have my name associated with the company,” Wyatt said.
“This company wins contracts as a joint venture with a domestic partner. However, the entire capacity to fulfill this contract belongs to the main partner.”
Wyatt said the problem arose when a group of men, including three non-Indigenous and two Aboriginal elders, told him they were starting a joint venture.
“I asked the elders exactly what their role in this was and they said, ‘We will get paid X amount.’ It made it clear that the black coating was not a theoretical element,” he said.
“There are three or four local managers I know who are just paid and have very little involvement in the company.
“That’s the definition of the black coat. A true Aboriginal business partner must co-lead and engage in decision-making as you would under the Corporations Act. I must sit with you on your board as both a stakeholder and a decision-maker.”
Wyatt said the latest analysis by the Australian National University looked at the distribution of IPP contracts from the program’s inception in 2015 to 2023.
Social policy researcher Christian Eva found that although the IPP had created contracts for 3,900 Indigenous businesses, half of the contracts over $10,000 were awarded to only 11 businesses, and half of the cumulative value of contracts over $10,000 were awarded to 18 businesses.
“A staggering 27 per cent of the total value of all contracts went to businesses with unidentified Indigenous ownership status,” Eva said.
“This is deeply troubling. Under what other program would a core requirement be considered this flexible?”
Wyatt said contracts mostly flowed to businesses in major capital cities, despite most indigenous Australians living outside the capital cities.
“Interestingly, the lion’s share went to Canberra companies. The ACT is home to just 1 per cent of Australia’s Indigenous population, but still secures 18 per cent of Commonwealth procurement contracts,” he said.
“Very few Indigenous groups in regional Australia access the government’s Indigenous procurement programme.
“This should have triggered a government investigation into the possible misuse of billions of taxpayer funds.”
More than 6,000 organizations are registered with Supply Nation’s database of certified Indigenous businesses.
“But Supply Nation still denies there is a problem,” Wyatt said.
“They tried to set up a certification system that serves a purpose to some extent. But it’s not comprehensive enough; you have to review all the actual documents and have a verification system that includes any red flags that come up. That’s not happening.”
Supply Nation has been contacted for comment.
Professor Mayowa Babalola, chair of Business Ethics at the University of Western Australia, recently wrote an article about black plating. Australian Financial ReviewWithout independent verification, Supply Nation’s certification “is an inadequate representation of true Indigenous participation,” he said.
He added that there were systemic flaws in purchasing practices. “These are not isolated failures. These are systemic failures… When systems designed to benefit Aboriginal and Torres Strait Islander people are compromised by undisclosed conflict, inadequate oversight, institutional non-response to documented concerns, the people those systems were built to serve pay the price,” he said.
Wyatt raised the issue of black cladding with Prime Minister Anthony Albanese and Federal Minister Malarndirri McCarthy in October last year.
He said as a former Aboriginal Affairs minister he had ordered a Cabinet document on the issue but the reform had been stalled due to the 2022 election.
“We were trying to tighten regulations to ensure greater integrity in identifying genuine businesses,” he said.
Beginning July 1, the Indigenous Procurement Policy threshold will increase the required First Nations ownership and control to 51 per cent. But Wyatt said this reform would not solve the problem.
“You can still go into a joint venture where you own 51 percent of the company on paper, but an innovative person will find ways to ensure that non-natives maintain control,” he said.
Wyatt also rejected claims that too few Indigenous people have the ability to sit on company boards and fully participate in business decisions.
“If you can’t get local people, then bring in some executive directors who can work with community people to ensure the company is run according to their wishes and within the framework of Commonwealth legislation,” he said.
“Then at some stage, that board should identify a few very bright people in that community and mentor them, allow them to attend board meetings, teach them how to read papers and then how to make decisions, how to ask questions.
“You cannot underestimate the importance of the Indigenous Procurement Policy in closing the gap and building a foundation of prosperity for Aboriginal people.
“If we cannot grow domestic companies as the IPP intends, close the program.”
Victoria Laurie is a senior reporter and features writer who has written for Good Weekend, The Australian, The Bulletin, The Monthly, HQ, Australian Geographic and The Weekend Australian Magazine.
