An NT MP has described how a work-for-the-dole scheme is driving people to desperation.

MLA Chansey Paech represents Namatjira — a vast electorate that includes part of Alice Springs and communities further south.

Mr Paech this week addressed a Senate inquiry into the Federal Government's Community Development Program (CDP), something he describes as a “national shame”.

He said the program cruelly fined participant’s welfare allowances for minor or unjust breaches, leaving them with “no form of income or no stable income”.

“You will often get calls from people in the community where they are stuck, they've been breached and they need money to buy the bare essentials,” he said.

“People coming into town for a medical appointment are being breached and are unable to get back, so it's working in to help them [get] transportation home.”

Mr Paech said he had to dip into his electorate allowance of $78,000 to help constituents, providing Coles and Woolworths gift cards to help people purchase food.

The CDP’s near-35,000 participants have received more than 200,000 fine notices in the past two years.

The scheme issues fines of a day's Centrelink allowance if participants miss work-for-the-dole activities or are late.

The unemployed participants in remote areas under the CDP must work five hours each weekday - three times longer than many city-based jobseekers.

The committee has been told that the fine system is impractical and inappropriate because people can be punished for having to travel long distances to make medical appointments, attend cultural activities or simply go shopping.

Liza Balmer from NPY Empowered Communities told the hearing that many participants did not understand the program requirements.

“There's a lot of assumptions made under this program: that people have a mail service, that they have an address, that they can actually read the information that comes to them, they can read English and can speak English, and that they're able to access Centrelink in some way,” she said.

Mr Paech said Centrelink needed to engage the territory's Aboriginal Interpreter Service.

“I think that moving forward there's an opportunity to certainly work with the [service],” he said.

“A requirement that I would be looking to see is that Centrelink could move to a position where they have place-based people on communities who are Aboriginal, who understand the first languages, who are able to act as an interface [with Centrelink],” he said.

Indigenous Affairs Minister Nigel Scullion issued a statement saying; “The Government recognises more needs to be done to break the cycle of welfare dependency in remote communities.”