A chance weak season out in the field, poor judging, inept initial selection of entries - all these may have played their part in the composition of this exhibition, but the core factors behind the crisis facing the NATSIA award, in its 22nd year, cut to the heart of the fast-shifting indigenous art bazaar.

Entrenched tendencies have surfaced with a vengeance, and their effects are impossible to miss. The rage burns for "novelty", for new styles, for new painting regions deep in the desert, while demand for work - any work - by "name" artists is equally fierce. In this sharks' frenzy, speculative middlemen and buccaneer dealers flourish: for art has become almost the sole viable economic activity across much of the indigenous world.

As a result, those artists who are known and skilled face unremitting pressure from their families and dependents to work faster and larger, and conform to the market's hectic demands - to produce, in fact, precisely the kinds of overblown, vacant paintings that now fill the Darwin museum's gallery space.

Paint larger, goes the cry, paint flasher - paint Telstra style! Everywhere, this booming bazaar's trends can be felt.

In Arnhem Land, the northern fastness of sober art tradition, the urge to experiment, to seize the viewer's eye, is coming to dominate. Urban Aboriginal artists are almost painfully obliged to make their ethnic identity the raison d'etre of their art.

The NATSIA show illustrates this story with urgent clarity. Consider the winner of the $40,000 first prize, the headline-grabbing "grass Toyota" made by a collective of women weavers from the small community of Blackstone in the western desert.

"Wonderfully witty, well-crafted and relevant," according to the judges, Doug Hall, director of the Queensland Art Gallery, and Destiny Deacon, Melbourne-based indigenous artist.

"This work not only recognises but also celebrates the four-wheel drive as central to desert living for Aboriginal people."

In fact it does nothing of the kind. It is an expression of the desire for a Toyota (lightly used, about $40,000), and thus functions profitably as a rather postmodern cargo cult object. No one begrudges the Blackstone ladies their triumph, but this is not the most perfect thing in the exhibition. It is neither beautiful, nor true - it is simply a pile of vaguely car-shaped grass.

Of course NATSIA contestants, even in the far desert, realise they must come up with such striking, newsworthy gags to scoop the pool. And NATSIA's rotating judges like to strive for controversy, both to glorify themselves and to ensure prominence for the contest. Who but purists would complain that a piece of craft has won an art award? Grass meets judges: each side is satisfied.

In recent years the general painting prize ($4000) has gone to majestic works by newly emerging talents. Hall and Deacon gave it to a wall-sized slab of paint from the Utopia region: Yam Dreaming, by Evelyn Pultara, a piece which struck Hall with its dynamic, vibrant movement. It is distinguished solely by being among the ugliest paintings in the show. It is without rhythm, grace or form. Maybe it does represent "a dreaming of significance", but it also resembles a vast colour television screen with a malfunctioning vertical hold control. As if by way of coded apology, Hall and Deacon mutter in their comments that some well-known art-producing regions yielded up "uneven" work this year.

Unintentionally, they highlight here the deepest problem with NATSIA: who judges, especially the first cut - and how. Step forward, then, the pre-selection panel which compiled the final hang from which Hall and Deacon made their choices.

It was composed of a team from the NT Museum and Art Gallery, enhanced by Darwin indigenous curator Gary Lee, Alice Springs artist Dan Murphy and Brenda Croft, indigenous art curator of the National Gallery of Australia. (Croft thoughtfully absented herself while a work she had submitted was accepted by her colleagues. Did she really think it might be turned down? One should be either contestant or judge.)

The panel proceeded to examine mere photographic images of proffered entries, before making their choice. Photographs? Who knows what they miss by relying on this slender evidence? NATSIA would be well advised to divert a quarter of the prizemoney next year to meeting the costs of transporting all entries to a central viewing point. And who should say what constitutes good or bad Aboriginal art? The lack of a serious critical language in relation to this large, much-valued archipelago of creativity is detrimental to the industry, and to its chief award.

In the vacuum of critical response, in the desire to see merit in all forms and all regions, the seeds of the present exhibition, dominated by scale and effect, surely lie. (The passionate, judging eyes belong to private collectors, who have always been far ahead of Australian public galleries in their love of Aboriginal work.)

The convention at NATSIA is to appoint two final judges, one an indigenous artist or expert, one a senior institutional curator. Hall and Deacon, the two picks this year, seemed to find themselves at sea in the wash of works shown in the clean, crisp hang. What words would allow them to weigh a mauve Hart's Range landscape by outsider artist Billy Benn against the coiled, tense Pintupi work of Walangkura Napanangka?

It is not immediately obvious that directors of public art galleries are good choices to judge this award. Nor should we gaily assume that indigenous artists or curators have automatic insight into the qualities of indigenous art from all across the continent.

Some works, though, convince without advocacy. The bark painting award went to Yirrkala-based Banduk Marika, for a spare depiction of her clan's Yalangbara site. Precise and self-contained, full of sheen and compressed light, this bark refers to the arrival of a pair of creator sisters, the Djanggawul, on the coastline of northeast Arnhem Land. Its designs trace the pattern of salt water drying on the skin. They speak, too, of the order and gravity of a threatened world. It was no great coincidence that the artist, in her acceptance address at Friday night's ceremonies, spoke the only words recognising the deep social plight of remote Aboriginal Australia today.

A walk round the NATSIA exhibition will disclose the odd lurking gem - a little bark by Lofty Bardayal showing a flying fox, a Paddy Fordham sketch, Drinking in the Cemetery. But the most intriguing art to be seen in the northern capital at present hangs elsewhere: in the Entertainment Centre where, in an empty room, subtle, intricate works by Torres Strait Islands print-maker Dennis Nona are on silent view.