After Mount Isa's only Indigenous social housing provider accumulated almost $1 million in unpaid rates, resulting in 25 properties being placed up for auction, the federal government is facing scrutiny over what it is doing to prevent a dozen families from becoming homeless.

Last month, the ABC 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.

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

Questions over emergency intervention

In the Senate on Wednesday, Independent Senator Lidia Thorpe questioned what support was being provided to affected families, warning that "desperately needed Aboriginal housing will be permanently lost to private buyers and many of these families fear they will become homeless".

"What emergency action are you taking to ensure these families stay in their homes and these properties are retained for Aboriginal housing?" Senator Thorpe asked Minister for Indigenous Australians, Malarndirri McCarthy.

"Is there emergency funding coming?"

In response, Senator McCarthy described the situation in Mount Isa as a "real concern" and said she had contacted both the Queensland local government minister and the city's mayor.

"We are 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," she said.

"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."

Senator McCarthy said the federal government was "very concerned about the timeline that is left for the council to use the option of selling the properties".

"I want to know that the families have choices and that the families are very much involved, so I have asked the agency to make sure it is working with the families," she said.

"But I also want to be reassured that the council itself — Mount Isa council —and the Queensland government are working with me to ensure that we do not have added homelessness in Mount Isa."

Whilst the National Indigenous Australians Agency (NIAA) have been in contact with the Queensland government, the Department argues the responsibility for Indigenous housing transferred from the Commonwealth to the states in 2009.

After Senator Thorpe asked why the state's were blaming the Commonwealth and vice-versa, Senator McCarthy noted: "I think most Australians would also question the relationships between jurisdictions and the Commonwealth.

"But I would say to the families in Mount Isa that I am very concerned about their situation and, yes, I am working with the Queensland government and the Mount Isa council. I want to reassure the families that it's important that you are not left homeless in this whole situation," the Minister added.

Long-running governance concerns

ATSICFWS, which is registered under Virginia Mayo with the Office of the Registrar of Indigenous Corporations (ORIC), has faced a number of compliance issues in recent years, including a $15,000 fine in 2025 for failing to lodge financial reports.

In the Senate, Senator Thorpe noted that families had been raising concerns about ATSICFWS for years and that ORIC had long been aware of governance issues within the organisation.

In 2013, the Federal Court ruled that 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.

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.