Australia's government has settled a lawsuit and will pay $1.44 million in compensation to hundreds of Aboriginal people who argued a welfare scheme was racist.

According to the BBC, a group representing 680 people in 10 communities in Western Australia sued the government, arguing that the "work for the dole" scheme, under the Community Development Program (CDP), breached anti-discrimination laws.

The programme, introduced in 2015, required people in remote outback communities to work up to 25 hours a week to receive income benefits - double the hours required of people working in cities.

Critics argued the programme was racist because it set harsher rules than other welfare schemes. Over 80 percent of those using the CDP were Aboriginal Australians.

Australia Institute research in 2018 found that a CDP participant was more than 25 times more likely to receive a penalty than a participant in urban Australia’s Jobactive programme and 55 times more likely to receive a serious penalty.

Advocates said the requirements disadvantages Aboriginal and Torres Strait Islander people living in some of Australia's poorest and most isolated communities.

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Modern-day slavery

The Federal Court of Australia found that people in the lawsuit had lost about $1,300 each on average, due to the programme's conditions.

Critics had previously described the scheme as "modern-day slavery". People were typically paid just $7.24 an hour - half the national minimum wage.

Earlier this year, the government announced it would axe the programme and introduce a new one by 2023.

Last year, it was also forced to pay a $868 million settlement over a welfare policy dubbed "Robodebt" that had been ruled illegal. 

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