Malcolm Turnbull says despondency in indigenous communities is highlighted too often and that does nothing to help those who aspire to succeed.
He insists jobs and setting up businesses are crucial to the lives of indigenous Australians.
Handing down the annual Closing the Gap report on Monday, the prime minister focused on growth in indigenous businesses as a sign of success, while acknowledging four of the seven targets are not on track.
He announced a new indigenous grants policy to increase the number of local indigenous-owned and -controlled organisations.
The policy will extend principles of the indigenous procurement policy, which has allowed indigenous businesses to win more than $1 billion in government contracts since 2015, up from $6 million in 2012/13, he said.
"The government must be the enabler of this success," Mr Turnbull told parliament.
"Too often we are quick to highlight the despondency which does nothing to help those who aspire to be like (the) people that work hard and succeed all the time, all while being proud First Australians, Aboriginal, Torres Strait Islander Australians."
In highlighting other successes, Mr Turnbull said the latest Closing the Gap report shows the target to halve the gap in Year 12 attainment by 2020 - remains on track.
Two more targets - halving the gap in child mortality by 2018 and having 95 per cent of all indigenous four-year-olds enrolled in early childhood education by 2025 - are both now on track.
However, the remaining four targets are lagging, including a key goal to close the 10-year gap in life expectancy between indigenous and non-indigenous Australians by 2031.
As well, three of the remaining four targets - to halve the gaps in employment, reading and numeracy, and in-school attendance for indigenous students - are due to expire in 2018.
Work is underway to update the targets, with the deadline for that extended until October.
Former prime minister Kevin Rudd, who introduced the strategy after his apology to the stolen generations in 2008, says he isn't against a refresh but the original targets were meant to be ambitious.
"What I do oppose is if these targets are watered down to let governments, federal or state, off the hook - to lessen the political responsibility, to lessen the financial burden," he told the National Press Club.
Indigenous Affairs Minister Nigel Scullion says while some targets are not on track to be met, there has been solid progress in other areas compared with a decade ago.
Indigenous Labor senator Pat Dodson says any news of progress, "microscopic as it might be", is refreshing.
However, he stressed the need to include more indigenous people in service delivery and improve housing supports.
He also welcomed suggestions the Turnbull government may be open to the idea of including targets on incarceration rates and child protection.
One Nation leader Pauline Hanson on Monday revived her attacks on taxpayer money being spent on indigenous Australians, drawing sharp criticism from Labor.
Australian Associated Press