This week, the NIAA took a significant step towards addressing these priorities with an announcement. They announced an important shift with the application of Indigenous employment rules to Commonwealth contracts. In a move that affects two-thirds of such contracts, the agency has dropped the requirement for contractors to hire a minimum number of Indigenous people or engage Indigenous businesses. This decision comes after the agency has repeatedly dropped the ball on keeping its guidance up-to-date for how to navigate these participation rules since July of 2020.
Prior to this example, the NIAA had required Indigenous participation on 870 contracts. A DOT audit found compliance on just a fifth of those contracts—which resulted in some deeply troubling findings. Of the 174 contracts we audited, 45 (28 per cent) failed to comply with the local rules that were set up.
Rise in Contract Exemptions
This practice of exempting contracts from Indigenous employment rules is quickly gaining traction. A whopping $70 billion in contracts are suddenly exempt from having to meet these participation thresholds! We understand that some exemptions make perfect sense, but others are not as clear cut. Even more curiously, a full third of the exempted contracts indicated “other” as their cited reason for exemption. That means most of these justifications lack specificity.
Between July 2016 and September 2022, the Defence Department was responsible for $35 billion— more than half— of all exempted contracts. Over 50% of these exemptions listed “other” as their justification for excluding the project. This raises troubling questions about transparency and accountability in the procurement process.
Compliance Issues Identified
The recent audit undertaken by the National Indigenous Aussies Association raised serious concerns on the use and enforcement of Indigenous inclusion laws. Even more alarmingly, one-fourth of the contracts reviewed were non-compliant. Auditors warned that the excessive application of exemptions is eroding the intent of the Indigenous Procurement Policy.
“The inappropriate use of exemptions impedes achievement of the Indigenous Procurement Policy’s objectives” – auditors
The call for new, meaningful guidance specifically for Indigenous businesses has never been more urgent. The NIAA has so far failed to live up to its commitment by releasing these critical resources. This absence of new guidance is especially concerning as reporting requirements have changed since first introduced in July 2020.
