Bipartisan consensus on Indigenous policy ruptured on Wednesday when several Coalition MPs walked out on a speech by Labor leader Bill Shorten calling on the government to reverse $500 million in budget cuts.

The annual Closing the Gap report to Parliament exposed deep differences between the government and opposition, with Indigenous leaders clapping the speech by Mr Shorten after responding in polite silence to an address by Mr Abbott.

The Prime Minister expressed "profound disappointment" that the report showed most targets are not on track to be met, including the critical goal of closing the gap on life expectancy.

Lamenting that there were too many "backward steps" in the report, Mr Abbott said this was not because of any lack of goodwill or effort by successive governments.