Prime Minister Scott Morrison says the vast majority of work for the dole penalties are usually waived, after new data revealed indigenous communities are hardest hit by the scheme.
Participants in the Community Development Program can face fines of about $50 a day for missing tasks, with statistics revealing areas with higher levels of indigenous participants get more penalties, the ABC reported on Thursday.
In one community, participants of the program were fined 15 times on average, totalling about $650 for each person.
Mr Morrison says 93 per cent of work for the dole penalties have been waived, and he expects all participants to keep turning up for work.
"We don't like to make exceptions in that area and we don't," he told reporters in Sydney.
The prime minister met with the Indigenous Advisory Council on Thursday to discuss increasing both workforce and school participation.
"Being safe, being healthy, going to school, getting a job, growing older with dignity and respect and having choices - I want that for all Australians, and that includes indigenous Australians, of course," he said.
Labor senators Pat Dodson and Malarndirri McCarthy, who are both indigenous, said the government could no longer deny the failure of the discriminatory program.
"The federal government's delusion that this failed program works is astounding," the pair said in a joint statement.
"It is time the government started to listen and act for the people that it says it represents."
Peter Defteros from Jobs Australia, which represents non-profit employment providers, said the program was clearly doing more harm than good.
"It is disturbing, but not surprising, that the greatest burden of penalties is being felt by Aboriginal and Torres Strait Islander people," he said.
The government has flagged changes to the controversial welfare initiative, which forces 35,000 unemployed people in the bush - most of whom are indigenous - to work up to three times longer than city-based jobseekers to receive welfare.
The changes include slashing work requirements from 25 to 20 hours per week, easing demands on medical evidence, and relaxing income reporting requirements for some participants.
Australian Associated Press
