Australia's system for steering government contracts to Indigenous businesses is facing fresh scrutiny over a practice known as black cladding. Scott Franks, who says he was a victim of it, describes black cladding as a situation where a business looks Indigenous owned and run, but the Indigenous partner in fact retains little control. In his case, the business broke and could not pay its bills.
Black clad businesses are able to bid for lucrative government contracts through the Indigenous Procurement Policy, known as the IPP. The policy is designed to direct work to Indigenous enterprises, but critics say it can be exploited by arrangements that put little genuine ownership or benefit in Indigenous hands.
The sums involved are substantial. Since 2015, around 15 billion dollars worth of Commonwealth contracts have been awarded through the IPP. That scale is part of what makes the integrity of the policy so important, given how much public money flows through it each year.
However, research from the Australian National University found that less than a third of IPP contracts have actually gone to majority Indigenous businesses. As one assessment put it, the real issue lies with individuals wanting to have a piece of a procurement opportunity that was not made for their benefit, rather than with the goal of the policy itself.
The not-for-profit Supply Nation has been funded for a decade to run a register of Indigenous businesses. A Supply Nation spokesperson said all complaints of black cladding are investigated, but did not answer further questions on the matter. The organisation sits at the centre of efforts to verify which businesses genuinely qualify.
In response to the concerns, the federal government will from next month require businesses to be at least 51 per cent Indigenous owned and controlled to take part. For Scott Franks, those changes do not go far enough. He argues the policy is wrong and not fit for purpose, leaving the door open to a big investment in Indigenous business delivering only mixed returns.