Indigenous Business Leaders Call for Clearer Definitions to Address ‘Black Cladding’ Concerns
During the Senate inquiry, representatives emphasized the importance of active management involvement for First Nations businesses.
A significant issue in Australia’s economic landscape is the misuse of Indigenous identity by non-Indigenous companies, known as “black cladding,” to gain unfair advantages, especially in government contracts. Representatives at the Senate Committee inquiry on economic self-determination and opportunities for Indigenous Australians called for clearer standards to define and prevent this practice.
Challenges in international markets, limited product diversity, and complex regulations were also highlighted, along with concerns about equity dilution affecting Indigenous status due to access to capital barriers. The need for stricter criteria, including active involvement in business operations, was stressed to combat black cladding risks.
Supply Nation’s CEO Kate Russell explained that Indigenous businesses should be at least 50 percent Indigenous-owned, with certification requiring 51 percent ownership, management, and control to combat black cladding. She advocated for stricter criteria to protect Indigenous identities and ensure genuine Indigenous business operations.
Tiarne Shutt of First Nations Finance noted that rigid definitions may not capture the diversity and nuance within First Nations businesses, leading to the support of alternative frameworks that assess more than simple ownership percentages to ensure genuine Indigenous leadership and values in business operations.
Indigenous businesses face unique barriers such as the expectation to act as social enterprises and fear of association with black cladding, affecting partnerships with corporations and government entities. Access to capital is a challenge for Indigenous entrepreneurs, with concerns about diluting equity to secure funding while maintaining Indigenous ownership status.
Representatives suggested targeted support for traditional owners in negotiating agreements with project proponents, emphasizing the need for skills training and resources for Indigenous entrepreneurs to participate effectively in major projects.
