Recommendations by the Parliamentary Joint Committee on Human Rights to shift compulsory income management to a voluntary system would have limited impact without sustained investment in culturally-appropriate financial literacy programs.

The first inquiry review that concluded last week found income management schemes like BasicsCard and SmartCard provide limited benefits, while causing significant social harm and stigma.

Seven key recommendations were made by the committee, among them proposed amendments to the Social Security (Administration) Act 1999, to make income management voluntary, and the creation of a process for individuals to permanently exit compulsory income management.

The committee also recommended the federal government consider investing in a comprehensive range of local support programs, community-driven alternatives and the creation of more meaningful jobs.

First Nations Foundation chief executive, Phil Usher acknowledged the review highlighted compulsory income management as an infringement of human rights, and that the scheme had perpetuated systemic stereotypes about First Nations people and how they manage money.

However he emphasised creating more jobs alone wouldn't help communities navigate the complex relationship between culture and money.

"Jobs are often seen as a way to financially empower Aboriginal and Torres Strait Islander people, but they alone won't help communities navigate cultural obligation and money," Mr Usher said.

"Aboriginal and Torres Strait Islander people follow a sharing economy, where money is distributed throughout the community with less emphasis on individual wealth and accumulation.

"What's needed are education programs that understand this dynamic and offer proper guidance.

"Otherwise, it's like lifting the guard rails with little support."

Mr Usher said Indigenous people usually had limited financial resources, which restricted their access to safer financial products and services and pushed them towards high-cost, credit products, perpetuating a cycle of poverty.

A 2019 report, Money Stories, produced in partnership with First Nations Foundation (FNF), NAB and the Centre for Social Impact, revealed that nearly 22 per cent of Indigenous people had accessed fringe credit - such as payday loans - within 12 months, compared to just 8.4 per cent of the non-Indigenous population.

"Predatory payday lenders target Aboriginal and Torres Strait Islander people, particularly in remote communities, who are often excluded from mainstream and better-regulated financial services," Mr Usher said.

"It's a poverty cycle, which is why, although the Foundation fully supports the end of income management, we advocate for greater investment in financial literacy for Aboriginal and Torres Strait Islander people.

"Education is the starting point to ending poverty. It provides an opportunity for First Nations people to feel empowered to manage their own finances, navigate cultural obligations and sidestep financial pitfalls and debt."

FNF has set a strategic goal of expanding its financial literacy training to 250 communities by 2034, via initiatives such as its On Country program, which trained external professionals in community organisations and financial wellbeing roles to effectively deliver its initiatives.

FNF has to date successfully trained 277 organisations, while 313 community members had attended mentor-led training and 422 mentors were registered for the On Country financial wellness resource hub.

"The impact of broadening our reach through our On Country program will mean that more communities will benefit from our powerful financial literacy training," Mr Usher said.

"We can all appreciate that education helps pave the way toward success, so as the inquiry continues, we're asking that financial literacy be part of the broader strategy to ensure financial autonomy for Aboriginal and Torres Strait Islander people."