The Productivity Commission is calling for new laws to stop the misappropriation of Aboriginal and Torres Strait Islander art and culture following its final report on indigenous arts and crafts.

The overall market for Aboriginal and Torres Strait Islander visual art and craft, including souvenirs, is worth upwards of $250 million.

The market for Indigenous-style souvenirs is worth $80 million, yet two out of three products are fake and have no connection to indigenous people, the report found.

Up to $54 million of that total was being spent on fake souvenirs in 2019-20.

“Inauthentic Indigenous-style products mislead consumers, deprive Aboriginal and Torres Strait Islander artists of income and disrespect cultures,” commissioner Romlie Mokak said.

The report said fake art causes harm and offence by misusing sacred symbols and stories, as well as undermining traditional laws, but indigenous communities have limited recourse to stop this misappropriation.

The commission has called for mandatory disclosure when apparently Indigenous products are made by people who are not Aboriginal or Torres Strait Islanders.

This would steer buyers towards more authentic products, and work more effectively than trying to ban fake aboriginal art, the commission found.

New laws would also give traditional owners legal remedies when their cultural assets, such as sacred symbols, are used in arts and crafts without authorisation.

The federal government welcomed the report and said it was committed to working with Indigenous people to establish standalone laws that would protect traditional knowledge and cultural expressions.

“For too long, fake ‘Indigenous-style’ merchandise has undercut legitimate artists, misled consumers and caused a number of cultural harms. This has to stop,” Arts Minister Tony Burke said in a statement.

The government promised to release more details about improving long term outcomes for Indigenous artists and businesses as part of its National Cultural Policy.

The Productivity Commission report recommended a review to ensure that government funding is going where Aboriginal and Torres Strait Islander communities want it to.

The report notes that art centres, organisations and support services are critical to the industry, but Aboriginal and Torres Strait Islander people are under-represented in management and leadership jobs.