Indigenous minority groups in countries such as the US, Canada and Australia are amongst the most disadvantaged minority groups in the de-veloped world. This disadvantage is strongly associated with 'pre-market' factors. This paper examines pre-market disadvantage of indigenous Australians by assessing academic performance at a relatively early age. We find that, when compared to non-indigenous Australians, indigenous Australians are already, on average, 1 year behind in academic achievement by the age of 10. Furthemore, their performance continues to deteriorate over the next two years of schooling. Only a limited proportion of their poor achievement can be accounted for by observable personal characteristics or unobservable variations in school and spatial characteristics.