Audit wants massive indigenous shakeup

Indigenous affairs funding will undergo a massive shakeup if the Abbott government's commission of audit gets its way.

The commission recommends a huge consolidation of the various indigenous programs and bodies - reducing the number from about 150 to no more than six or seven.

It is important for the government to address indigenous disadvantage, it says.

"There is, however, significant scope to improve the effectiveness of indigenous expenditure."

The commission's report says there is too much overlap and duplication between the commonwealth and states, and administrative processes are excessively bureaucratic.

It says the commonwealth should pull back on funding for traditionally state-based areas like housing.

It also recommends a new voucher program for the education and training of indigenous youth.