One per cent won’t fix it? New Indigenous Procurement Policy test shifts the numbers, but real control still matters

Canberra will lift the Indigenous ownership‑and‑control test from 50% to 51% for most suppliers using the Indigenous Procurement Policy (IPP) and begin transition on 1 July 2026, which aims to move decision‑making into Indigenous hands – but whether it curbs “black cladding” (or blakwashing) will depend on how control is verified in practice.

The government is also exploring more transparency on Indigenous participation in major contracts.

What’s changing

A business will need to be at least 51% Indigenous‑owned and controlled or be registered with ORIC to qualify as an Indigenous business under the IPP.

The shift from 50% to 51% is designed to move organisations from “negative control” settings to a majority control position for Indigenous owners… and Transition to the new test starts 1 July 2026 – with detailed transitional arrangements to come.

Why it matters

The brief explains that 50/50 structures can lock decision‑making behind unanimous votes.

Thus, moving to 51% helps Indigenous owners pass ordinary resolutions unless a shareholders’ agreement says otherwise… and the note also urges reviews of constitutions and shareholder agreements so the new majority isn’t blunted by veto rights.

Black cladding crackdown
NIAA will work with regulators to address “black cladding” (illusory arrangements to access IPP benefits) and provide reporting pathways and targeted education.

In addition, the government will also explore ways to lift transparency against Mandatory Minimum Indigenous Participation Requirements (MMIPR) in high‑value contracts.

Why labels aren’t enough

Recent greenwashing cases show what happens when claims don’t match reality.

The Federal Court ordered Vanguard to pay $12.9m for misleading ESG screen claims (Sep 2024), and Active Super to pay $10.5m for greenwashing (Mar 2025). ASIC’s INFO 271 sets out how to avoid misleading sustainability claims – principles that rhyme with IPP verification…

And these cases underscore the need to test substance over slogans.

Analysis (workarounds to watch)
Even with 51%, practical control can be diluted if a non‑Indigenous partner holds powerful reserved‑matter vetoes or if day‑to‑day management is outsourced in a way that sidelines Indigenous directors.

Which is probably why the brief itself recommends revisiting shareholder and governance settings to guard against that outcome.

However, what if all the money is being syphoned through an Indigenous owned shell company, and all the money goes to non-Indigenous contractors for service delivery?

I guess we’ll see about the implementation and impact… (TBC – July 2026).