The federal Government’s controversial Northern Territory income management scheme has been branded a nutritional failure, with indigenous communities continuing to load up on junk food despite stringent measures meant to boost fruit and veggie sales.

The findings of damning scientific study of the impact of income management, read quietly into Senate Estimates in Darwin on February 15, reveal the scheme has had “no effect on fruit and vegetable sales or turnover” in the Territory.

Under income management, 50% of welfare payments are quarantined by the government to encourage a healthy diet. But the study, conducted by the Darwin-based Menzies School of Health Research, says fresh produce continues to linger on outback shelves.

“Against a background of increases in total store sales and in all commodities before income management at a rate consistent with inflation, income management appeared to have no effect on total store sales, food and drink sales, tobacco sales and fruit and vegetable sales.”

Menzies surveyed 10 stores operated by the Arnhem Land Progress Association across the Territory, with the findings based on sales data gathered 18 months before and 18 months after income management began in August 2007.

The study found that while sugary soft drink sales initially declined, after six months of income management they were still higher than before the program began.

Its authors, Julie Brimblecombe and Adam Barnes, said the full results will soon be published in a leading academic journal.

Megan Ferguson, an Outback nutritionist, said there was clear evidence that, when faced with shortfalls in quarantined income “people then go and put things back. In fact, what they are putting back is fruit and vegetables”.

The Senate is currently conducting an inquiry into the scope of the intervention as indigenous affairs minister Jenny Macklin moves to extend welfare quarantining across the country by 2012.

The Menzies results appear to contradict another study released last year, that claimed store operators were selling more fresh food under the $807 million intervention. Macklin’s department said the Australian Institute of Health and Welfare [AIHW] research proved two-thirds of people income-managed “had a positive view” of the program.

However, AIHW director Penny Allbon later distanced herself from the findings amid major ethical concerns over how the data was gathered.

“There was a limited amount of quantitative data on which to base the evaluation findings … [and] client interviews included only a relatively small number of clients (76), from four locations, who were not randomly selected,” Dr Allbon said.

Yesterday, the United Nations’ special rapporteur on indigenous rights, James Anaya, accused the Rudd Government of “racism” over the intervention, disputing whether its decision to reinstate the Racial Discrimination Act would ensure Australia meets its international human rights obligations.

A spokesperson for Macklin said she hadn’t seen the Menzies report and would only comment once it was formally released.