Such are the circumstances that have led up to the federal Government's ground-breaking inquiry into the Aboriginal art trade. The release of its report is looming: it will be the first gauge of Australia's resolve to tackle this crisis at the heart of our cultural life.

Former arts minister Rod Kemp announced the Senate inquiry into Australia's indigenous visual arts and craft sector last year. Its terms of reference have focused on economics: projected markets, infrastructure needs and sustainability. But the Senate committee has also considered the benefits of the arts sector to communities, as well as harmful, unethical dealings.

The inquiry follows the Northern Territory's six-year Indigenous Art Strategy, which sought to raise the benefits that art can bring to the Aboriginal domain; and the 2002 Myer Report into the visual arts and craft sector which recommended, among other things, a resale royalty. Such a system operates in parts of Europe, where artists receive a percentage of profits from secondary and subsequent sales of their work.

Recent auction sales - such as the $1.056 million paid this week for Emily Kame Kngwarreye's Earth's Creation - demonstrate the large sums of money that change hands when highly desirable works come on to the market.

As for the voluntary code of ethics that the National Association for the Visual Arts has drafted, it is in the breach that its worth will be demonstrated. NAVA was successful this week in having six ceremonial boards withdrawn from sale at the Lawson Menzies auction because of representations from the Central Land Council and others, who claimed that they were "secret and sacred", and thus subject to Aboriginal customary law.

Several important matters remain unfinished business: should the free market incorporate protectionist measures for Aboriginal artists, such as minimum prices and resale royalties? Will authentication marks and DNA tags attached to art works prevent the circulation of works that are of shady provenance?

What of the pre-auction arrangements by influential bidders, who artificially depress prices by agreeing among themselves that they will not compete for the same works? Is this auction rigging or shrewd investment? Can Australia's intellectual property law accommodate the extra protection demanded by many indigenous artists? How can voluntary codes of ethics for art dealers curb unethical practice?

Senators serving on this committee of inquiry have the opportunity to understand the indigenous art market as few others have been able to. There have been the usual turgid government documents and academic submissions but it is the personal accounts of art collectors and friends of artists that tell the true story of this debased market, as well as its extraordinary potential to provide worthwhile and dignified livelihoods for thousands of indigenous people.

The submissions have been honest, heartfelt, sometimes graphically painful, as in this case: "I saw one artist who I have known for years in Mt Nancy hotel one Sunday morning, 2005. She had the worst case of scabies I had ever seen. Her skin had become lumpy all over. As I sat on her hotel bed I was immediately invaded by the mites. She had canvases from five different dealers ... The sheets and blankets were infested as was the mattress ... As we chatted a brand new ute pulled up to pick her up for bacon and eggs and a day's work.

She was later admitted to hospital, and sent to Adelaide for treatment. It seems to me that none of the people queuing to get her work felt any need to look after her health."

The author of the submission from the central Australian Aboriginal artists' umbrella group, Desart, explained how the artists fall into the hands of unscrupulous dealers, known as carpetbaggers:

"There is widespread inability for artists to understand the fundamental nature of contracts and there is the potential for unconscionable dealing. At the same time indigenous people are often very poor. They often have sick families. They are commonly welfare recipients. Travel and food are far more expensive than for other Australians. This means that artists will often accept a quick cash payment under duress at a price well below reasonable market value."

How many children have gone hungry - and become ill, terminally ill - in these exchanges while carpetbaggers pay off their mortgages, spruce up their equity portfolios, dine out with clients, buy a new BMW?

The observer who reported on the woman detained in the filthy hotel room also had this to say: "The sorts of people who have come to seek their fortunes from Aboriginal artists are said to have had chequered careers: drug dealers, pirate video makers, illegal fur traders, ivory traders, caravan park owners, taxi drivers, even the occasional policeman has been known to trade in Aboriginal art."

Is this the provenance that buyers want for their art collections? And shouldn't collectors themselves be demanding the ethical trade of Aboriginal art? It is voodoo economics to say these matters should be left to the market, especially when the federal Government invests millions of dollars in the indigenous visual arts and crafts sector.

At least $8 million was contributed by the federal Government to the Musee du quai Branly in Paris, where a number of central Australian works on display bear a remarkable resemblance to items sold by the roadside in Alice Springs for less than $100, or a six-pack of beer. Do our diplomats and their staff want to explain the conditions in which Australian indigenous art is produced, before it ends up in the homes of nice people in Europe?

Where indigenous societies are in decline, so are their art traditions. In light of this, it might seem obscene to defend the rights of the buyer - to be assured the work they are buying is authentic - but there is a strong reason to do so.

Ultimately it is market demand that offers the possibility of a livelihood for Aboriginal artists. Not only do the carpetbaggers cause harm to the individual artist and her dependants, they also damage the market. And can there be any guarantee that a dealership, whether it be community-owned and operated or a strictly commercial agent, will not commit artists to the kinds of servitude and exploitation that is reported throughout the inquiry submissions? Guaranteeing the quality of work and the rights of buyers is dependent, surely, on the rights of the artists.

Two hot topics emerge from the submissions: standards for authenticating the provenance of artworks (their history and authorship); and ethics, how dealers and buyers in the marketplace engage in moral terms with the artists.

Several industry bodies have proposed strategies and mechanisms for regulating practices to overcome unscrupulous or unethical conduct and ensure the viability of the art. Many of the measures are necessary if there is to be any further growth in the market for indigenous art, including the international markets.

NAVA, the Australian Commercial Galleries Association and the several indigenous art industry bodies have a well-developed code of ethics, and it is evident that many of the successful and reputable galleries comply with them.

Some experts argue that the Trade Practices Act should be used. In the 1990s, an authentication mark was launched that would guarantee the provenance of Aboriginal art.

It failed to gain acceptance from some urban Aboriginal artists, who thought that the mark was intended to protect only artists working in traditional styles. Such a response is arguably one of the obstacles to preventing abuse.

A cohesive or coherent government policy is also lacking. When the Senate inquiry reports its findings, can we expect that federal, state and territory governments will act on its recommendations?

These issues have been in circulation for more than 20 years, and it is difficult to see either of the major political parties paying attention to this matter of national importance.

This is not pessimism, but a realistic assessment of the national mood. Our politicians are busy wooing the votes of the upwardly mobile who have had enough of indigenous politics. It will be difficult to catch unscrupulous dealers red-handed, and this will be the excuse for the failure to act.

We will know soon whether the federal Government will act when the report of the Senate inquiry is tabled. The die is cast.

Marcia Langton is chairwoman of Australian indigenous studies at the University of Melbourne.