Prime Minister Malcolm Turnbull used an Aboriginal dialect to begin his Closing the Gap statement to parliament, warning against overlooking Indigenous success.
Mr Turnbull tabled the eighth annual report, which shows two of the seven targets to improve Indigenous outcomes in health, education and employment are on track.
"The headline statistics in today's report do not recognise the diversity that exists in your culture, language and experiences," he said on Wednesday.
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The prime minister announced $20 million in extra funding for the Australian Institute of Aboriginal and Torres Strait Islander Studies, to collect "critical" cultural knowledge.
A referendum on constitutional recognition for Indigenous Australians would be an important step in reconciliation that would be done together "not done to or done for".
However, he warned any change needed the support of Indigenous Australians.
Mr Turnbull conceded there had been mixed progress on several Closing the Gap targets over the eight years since they were set.
"And today, again, we're seeing mixed results," he said.
Targets to halve child mortality by 2018 and Indigenous year 12 attainment levels for 20-24 year olds were on track.
However, the gap between life expectancy for Indigenous and non-Indigenous Australians remains at around 10 years and not on track to close by 2031.
No progress had been made on employment outcomes for Indigenous Australians since the target was set in 2008, with the target to halve the workforce gap still out of reach.
Reading and numeracy results were mixed, but Mr Turnbull said closing the education gap was achievable.
"With each report, we have an opportunity to assess where we must redouble our efforts and derive better value from the admittedly finite resources of government," he told MPs.
However, it was vital for government to listen to Indigenous people when they outline what needs to change, he said.
"When we close the gap we make ourselves more whole, more complete, more Australian."
Opposition Leader Bill Shorten said it was time to examine progress on Closing the Gap and speak the truth on what is not working.
"Not in the spirit of self-congratulations, nor trenchant self-criticism but just with clarity and honesty," he told parliament.
"To recognise that the progress we've made is uneven and too slow."
Mr Shorten believes political parties must strive to attract more Indigenous people into parliament, admitting Labor had not done enough in that regard in the past.
He reconfirmed the opposition's commitment to establishing a Closing the Gap justice target to reduce the disproportionate numbers of Indigenous Australians behind bars.
