A Senate committee has demanded an overhaul of the Community Development Program (CDP), saying the scheme is "causing real harm to people".

The controversial scheme forces unemployed people in remote areas to work up to three times longer than city-based jobseekers to receive welfare.

"CDP cannot and should not continue in its current form," the report stated.

"The committee is concerned about the significant and far-reaching negative impacts of the CDP on individuals and communities."

The Labor-Greens dominated parliamentary committee made 22 recommendations, including:

• Reducing the hours remote unemployed people must work;
• Not cutting people off from payments for eight weeks if they repeatedly miss appointments;
• Paying the minimum wage when people take part in work-for-the-dole activities; and
• Setting up a dedicated Centrelink hotline for CDP participants, amid complaints about telephone wait times.

In two years, about 350,000 financial penalties have been slapped on participants for missing activities or being late.

"We've seen way too much poverty and increasing hunger people are going hungry as a result of these breaches," Labor committee member Malarndirri McCarthy said.

"And we know from evidence given to us by WA Police, that even crime is rising as a result of lack of money."

Government criticises report as 'partisan and inaccurate'

Government senators issued a dissenting report disputing the negative portrayal of the scheme, but said changes were needed.

In a statement, Indigenous Affairs Minister Nigel Scullion dismissed the report as partisan and inaccurate.

"Unfortunately, this report is another example of Labor's approach to social policy doing and saying what is needed to fend off Greens candidates in inner city seats," Senator Scullion said.

"The Government strongly believes that all Australians can make a contribution to their community and that the best form of welfare is practical support to find a job."

Indigenous communities in debt

Thousands of work-for-dole participants are being forced to call Centrelink and face half-a-day telephone wait times to try and avoid crippling financial debt.

Senator Scullion yesterday released a long-awaited discussion paper with three proposals for changing CDP.

The committee visited Palm Island and Townsville in Queensland, Alice Springs and Papunya in the Northern Territory, and Kalgoorlie in Western Australia.

"The design of CDP is flawed and often nonsensical," Greens committee member Rachel Siewert said.

"People on income support in remote Australia were being fined for not showing up to hygiene classes and 3D printing training, it is farcical."

Most of the approximately 15,000 people required to undertake CDP activities are Aboriginal or Torres Strait Islander.

Australian Council of Trade Unions secretary Sally McManus demanded the "racist" scheme be scrapped.

"The racist work-for-the-dole scheme does not pay wages for the 25 hours of work participants have to do every week in order to receive welfare benefits," Ms McManus said.

"And [it] forces workers to work without OHS protections, leave entitlements superannuation or worker's compensation in the event of injury at work."

ABC Onlinehttp://www.abc.net.au/news/2017-12-15/work-for-the-dole-scheme-cannot-continue-report-finds/9261510