The federal government must buy Aboriginal homes being put up for auction in Mount Isa, a federal politician says, as residents face the prospect of homelessness.

In May, it was revealed the Aboriginal and Torres Strait Islander Corporation for Welfare Services (ATSICFWS) owed the Mount Isa City Council almost $1 million in unpaid rates accrued over five years.

The council subsequently moved to auction 25 properties from July 1, including 15 that are currently occupied. Under Queensland law, the earliest any of the properties could be sold is 15 days after the auction process begins.

It is understood the houses will face auction next week.

In response, Senator Lidia Thorpe called on the Commonwealth to purchase the homes at auction under the Lands Acquisitions Act 1989 and transfer them back to appropriate Aboriginal community control.

The Victorian Senator said her office had been taking calls from residents distressed at the possibility of homelessness.

"The Minister [Malarndirri McCarthy] also called to tell me the government has explored every option to stop these auctions," she said.

"I just don't accept that the Commonwealth government can't assist these families to stay in their homes.

"If they can't stop the auctions, then they need to buy the homes."

The federal government was contacted for comment.

In June, Senator McCarthy told Parliament the government was "working on this on several levels, looking at the opportunities for Indigenous Business Australia (IBA) to assist some of the families who want assistance with it".

"For those who are unable to use IBA, we're also looking at the opportunity — as are the conversations that I'm having — with the Queensland government and the Mount Isa Council in terms of the debt itself," she said at the time.

Many of the homes are in poor condition, with the Queensland government maintaining that Indigenous housing is a federal responsibility.

In previous correspondence, the National Indigenous Australians Agency (NIAA) told National Indigenous Times that while it had been in contact with the Queensland government, responsibility for Indigenous housing transferred from the Commonwealth to the states in 2009.

"NIAA staff have also been engaging with tenants and individual Corporation members to provide information about available support options," the NIAA said in June.

Long-running governance concerns

There have also been significant concerns over the operations of ATSICFWS, which has faced several compliance issues in recent years, including a $15,000 fine in 2025 for failing to lodge financial reports.

In 2013, the Federal Court ruled former director Leigh Kerkhoffs was required to repay $31,414 to ATSIC Welfare Services and pay a pecuniary penalty of $50,000 to the Commonwealth after improperly writing off nearly $380,000 in rent debt, including $23,194 of her own debt owed to ATSICFWS.

The Office of the Registrar of Indigenous Corporations (ORIC) said at the time that the "corporation was insolvent in 2012 and could not pay its creditors or make repairs and maintenance to tenants' properties".

Ms Kerkhoffs — now a director of Kalkadoon PBC — was also found to have caused the corporation to make unauthorised payments of $8,220 to herself.

It remains unclear how ATSICFWS has retained its registration despite its history of compliance breaches and governance failures.

Senator Thorpe said the Commonwealth should assist, "not least because they failed to deal with complaints about this housing provider made to ORIC for years".

A spokesperson for ORIC told the ABC earlier this year: "ATSICFWS is not required to report to ORIC on the delivery of its housing services, tenancy-management practices, or housing-asset-management activities.

"A regulator intervening whenever management is performing poorly would effectively transfer responsibility from directors to regulators, which is not how Australia's corporate governance framework is designed to operate."

Mount Isa Mayor Peta MacRae told ABC in July the council is "not in the business of wanting people out of their houses," but is faced with either writing off the rates or selling the properties — the former of which they have "absolutely no intention" of doing.

Senator Thorpe said the residents are not at fault, having been paying their rent only to be "failed by a dodgy housing provider".

The community will be "torn apart and displaced" if the houses are bought by a private provider, she argued.

"The Commonwealth needs to assist, not least because they failed to deal with complaints about this housing provider made to ORIC for years," Senator Thorpe said.

"The government says they've explored every option, but that's not true. They still have the option to buy these homes and save these families from eviction."