Centrelink’s remote work-for-the-dole scheme has been labelled “devastating” for Indigenous participants.

About 33,000 people nationwide are signed up to the Federal Government's Community Development Programme (CDP), almost all of whom are Indigenous.

The scheme is meant to reduce unemployment and welfare dependency in remote areas by making people work and hitting them with fines and penalties for not complying.

Participants and advocates say the penalty regime is pushing local Aboriginal people further into poverty.

Government data shows 215,485 penalties were issued to people on the scheme in 2017.

Indigenous Affairs Minister Nigel Scullion says penalties are “only applied as a last resort”.

In the remote WA town of Warburton, around a third of all residents are on the CDP.

Ngaanyatjarraku Shire president Damian McLean, who has spent a lot of time working at the Warburton community office helping deal with payment problems, says the scheme is a disaster.

“This program has just been a debacle. The Government won't walk away from it and they won't embrace a wider understanding of Aboriginal affairs,” Mr McLean told the ABC.

“And it's having a devastating effect on these communities.

“Very poor people were made a lot poorer. The community administrations were basically defunded so we are really struggling to keep our heads above water. It is very difficult for us.

“If you belt somebody for non-compliance, that's questionable at best. But if you keep belting them if somebody's demonstrated they don't have the capacity to comply, that's so much worse.”

Mr McLean says many in the community do not know how the scheme works.

“In fact, on the ground the participants themselves only have a very slender understanding what all these requirements are because most of it is heavily bureaucratised, particularly in the language,” he said.