Australia will have "another stolen generation" on its hands if it doesn't act to reduce high incarceration rates of indigenous people, Aboriginal leader Mick Gooda says.
Parliament was told the gap in life expectancy between non-indigenous and indigenous people was widening, the target to increase pre-school enrolments had been achieved, there were small improvements in the mortality rates of children under five, year 12 attainment levels and employment.
But there were mixed results with literacy and numeracy.
Mr Gooda, the Aboriginal Social Justice Commissioner, renewed his call for a new target - the over-representation of indigenous people in jails.
There has been a huge increase in indigenous women and youth being sentenced to jail, he said.
"If we don't do something drastic... we're going to see another stolen generation," Mr Gooda told reporters in Canberra.
"We're getting kids growing up being comfortable in jail; it's becoming a refuge, and we have to break that cycle."
He backed Ms Gillard's call for the Northern Territory government to reinstate a banned drinkers' register.
Mr Gooda said the goal posts were moving on life expectancy because non-indigenous people were getting healthier.
"If all we did right now is maintain the level of resources all we're doing is maintaining the gap, we're not improving it," Mr Gooda said.
"We need to increase efforts, not take the foot of the pedal."
National Congress of Australia's First People spokeswoman Jody Broun said too often successful indigenous programs were interrupted because they did not have funding certainty.
"We need to show the faith and make programs longer term," she told reporters.
Ms Broun said the congress was having discussions with the federal government about including justice targets.
Australian Greens senator Rachel Siewert said Ms Gillard's speech failed to touch on the controversial compulsory income management system.
Senator Siewert said the closing the gap report did not count as genuine progress.
"Just getting the kids through the door to preschool is not enough, unless they're actually getting help with their hearing problems," she told AAP.
The Royal Australasian College of Physicians called for extended funding for a national partnership agreement on indigenous health which expires in June.