Despite a concerted effort to move away from incarceration, the Australian Capital Territory continues to suffer the impacts of outdated justice approaches, a new report has found.

In their report outlining the ACT's criminal justice system released today, the Justice Reform Initiative (JRI) said the jurisdiction has the potential to lead the nation with a progressive and smart approach, but a "greater investment is needed to overcome the legacy of over-incarceration."

"The ACT is in many ways a national outlier," the report says.

"It has the lowest rate of incarceration in the country, the lowest numbers of people incarcerated, and a government which has a stated commitment to justice reinvestment, legislative reform and reducing recidivism.

"However, it also has the highest rate of recidivism (when including return to community corrections orders) and the highest ratio of First Nations incarceration rates compared with non-Indigenous incarceration rates."

Despite a series of progressive reforms from the ACT government, 80 per cent of all incarcerated people have previously been to prison. First Nations people account for 27 per cent of all incarcerated people, despite making up only two per cent of the Territory's population.

"[T]he current state of incarceration shows us that despite a genuinely promising reform agenda, the ACT is still dealing with the legacy of decades of the failure of imprisonment, and the failure to sufficiently invest in evidence-based alternatives in the community," the report states.

The ACT has recently raised the age of criminal responsibility to 12, which will be raised to 14 in 2025 - with caveats for "exceptionally serious and intentionally violent offences committed" by 12- and 13-year-old children.

In 2023, Aboriginal and Torres Strait Islander children were 14 times more likely to be detained than non-Indigenous children, with Indigenous children comprising 26 per cent of the youth prison population.

JRI executive director Mindy Sotiri said the ACT has made "commendable" strides in their commitment and actions to invest in "communities, not prisons".

"However, many of these programs are frequently under-resourced and this is especially true for First Nations-led organisations," Dr Sotiri said.

JRI pointed to a series of reforms proven to help reduce incarceration, including preventive measures; First Nations place-based approaches; and post release and diversionary community-led programs.

Bail support programs have been found to significantly reduce reoffending, increase compliance with bail conditions and improve a range of wellbeing measures, whilst early intervention programs are shown to reduce crime at a population level by between 5 and 31 per cent.

One of these programs, Yeddung Mura External Reporting Site in Fadden, has shown positive results in a culturally safe environment that provides a model of care that is hoped to be replicated across the ACT.

"We hope that, in the future, the directorate will collaborate with the community to implement more Aboriginal community-led solutions that will benefit clients," chief executive Priestley Obed said last month.

JRI said whilst the community and Indigenous-led programs across the ACT were doing considerable work in breaking cycles of disadvantage, "they are frequently not resourced adequately."

"This is especially the case for First Nations communities and First Nations community-led Organisations," the report found.

"While remarkable outcomes are often achieved (with very limited resources), in order to systematically reduce justice system involvement, the community sector needs a substantial injection of funds."

Dr Sotiri said the ACT has the opportunity to lead the nation in reform through genuine alternatives to incarceration.

"We've seen what's possible in jurisdictions that take a smarter approach, such as in Scandinavian countries, and there's no reason why we can't do better in Australia to reduce the number of people going into prison and improve community safety," she said.

JRI called on the ACT Government to further boost their current efforts in by establishing an annual $20 million investment for a 'Breaking the Cycle' fund to help "boost the impact of existing community-led programs and make them more accessible, reducing the churn of people into prisons."

Dr Sotiri said the report outlined "30 different alternative justice programs and organisations" in the ACT, no small feat given the size and population of the jurisdiction.

"Unfortunately, these programs are currently operating on a scale that is too small to make a systemic difference when it comes to reducing recidivism and criminal justice system contact in the ACT," she said.

"If we genuinely want to build a safer, more cohesive community, we need to invest more in community-led programs that address the drivers of crime and incarceration.

"There is a real opportunity for the ACT to be at the forefront of this change."