On a warm tropical Friday morning just before Christmas, the Northern Territory Government laid bare what many had suspected for years: the NT was dead broke and borrowing $4 million a day just to meet operational expenses, including public servants' salaries.

The debt — long raised by the previous Country Liberals government as a political bogeyman — is now projected to blow out from $3 billion to an eye-watering $35 billion over the next 10 years.

The financial crisis angered a lot of Territorians and kick-started Labor political infighting, resulting in three Labor MLAs being kicked out of Caucus for voicing their concerns over the handling of the crisis.

On his way out, Aboriginal affairs minister Ken Vowles took a parting shot at the Government, in part to hamper its argument that Indigenous disadvantage was the central factor in asking for another Canberra cash bailout, rather than fiscal mismanagement or a bloated public service with more executive positions per capita than Victoria.

"We're going to say we need [more money] because we have remote Aboriginal communities — then we'll spend it on a water park," Mr Vowles told Guardian Australia last month.

"We have ripped off countrymen in the bush for many, many years to prop up the [Darwin] northern suburbs.

"The money not spent on Aboriginal communities is disgusting."

Curious Darwin is our story series where you ask us the questions, vote for your favourite, and we investigate. You can submit your questions on any topic at all, or vote on our next investigation.

The issue of pork-barrelling money earmarked for Indigenous disadvantage into the white, leafy northern suburbs of Darwin is as old as self-government in the NT, an issue The Australian once called the "greatest scandal in contemporary Aboriginal affairs".

In the wake of the Territory's financial crisis, many Curious Darwin readers had questions, and almost 2,600 people voted for us to investigate this one from Gary Pinner:

"How have successive NT governments been able to siphon off money designated for remote Indigenous communities and instead spend it on predominantly non-Indigenous communities?

"And why hasn't the Federal Government ever done anything about it?"

So we took a look.

Federal money for remote Aboriginal communities doesn't all get spent on them. ( ABC News: James Dunlevie )

No requirement to spend allocated money on Indigenous affairs

The Northern Territory receives about 80 per cent of its $6 billion budget from the Federal Government through a reallocation of the GST, which is paid by consumers around Australia.

The NT currently receives $4.66 for every dollar it puts into the federal coffers. That's well below the $5.60 it once received, but interested parties have been paying attention and attempting to follow the money.

Last year, the Yothu Yindi Foundation accused the NT Government of underspending roughly half a billion dollars in GST payments meant for disadvantaged Indigenous communities in one year alone.

But the reason successive Territory governments have not put all their Indigenous disadvantage money into Indigenous-related issues is because they are not required to.

The money is calculated by accounting for Indigenous disadvantage and remote servicing, but there are no strings attached to the money when it leaves Canberra and flows into the NT Government's coffers.

Creative interpretations have been used by successive NT governments for years to back up their claims that the money is being used in the right places, said Bob Beadman, a retired Territory and Commonwealth public servant, a former chairman of the NT Grants Commission, and coordinator general of Remote Services.

Bob Beadman says NT governments creatively account for how they spend money. ( ABC News )

"They claim that since 95 per cent of people in Territory jails are Indigenous, then it's a legitimate allocation that 95 per cent of its corrections budget is therefore Indigenous expenditure," he said.

"A couple of the previous governments and the current Government [have claimed that]."

So public service executives are, according to the Government, the proper beneficiaries of Indigenous funding because they work to help Indigenous people by administering or overseeing Indigenous programs and services.

Public service boom outstrips population growth

Following the Howard government's 2007 intervention, the Strategic Indigenous Housing and Infrastructure Program was quickly developed to provide money to address remote Indigenous disadvantage and along with it, $1 billion to the Territory.

Through GST allocations, those payments increased after Kevin Rudd came to power.

It was money given to the NT government to clean up the sorry state of Aboriginal affairs, but there were never any legitimate checks and balances put in place, and no accurate and transparent running tab that would show exactly how much the NT received for that purpose and exactly where it was spent.

Living conditions in Utopia are dire for some, which federal funding aims to alleviate. ( ABC News: Neda Vanovac )

Cynical observers and participants like Mr Vowles have questioned whether it has become a case of keeping remote communities disadvantaged as an argument for the NT to take to Canberra when it needs more money.

Those GST weighting calculations put a neat formula to that purpose.

The NT public service has long relied on getting a large cut of the GST in order to maintain the status quo.

Between 2004 and 2016, it grew by 40 per cent — far outstripping the natural population growth of the Territory.

While nobody in the NT Government can point to tangible results in improving Indigenous disadvantage in those years, the public service now tips nearly 22,000 employees for a population of 240,000, bought and paid for with federal money — until now, when the NT Government has been forced to borrow to cover its costs.

Is there an incentive to improve disadvantaged people's circumstances?

"When [the remote Indigenous funds] were coming into the Northern Territory, they weren't going to where they were supposed to go," said Denise Bowden, chief executive of the Yothu Yindi Foundation.

"But then, all of a sudden, the Federal Government is saying, 'You're going to lose all this GST [funding]', so the [NT] Government comes out and says, 'What about all our Aboriginal people who are disadvantaged?'

"It tells me the only time the NT Government is going to kick up a stink about this is when it's hitting their pocket."

Denise Bowden says the Government only makes a fuss when it's set to lose money. ( Suplpied: Denise Bowden )

Chief Minister Michael Gunner said his Government was focused on "generational change" for Indigenous Territorians by providing new houses in remote communities.

If the $1.1 billion figure over 10 years to that end sounds familiar, it is because that was a program developed more than a decade ago that has still not produced many results.

"Health and education outcomes in our remote regions will never improve until we repair housing — it's the number-one issue facing remote communities," Mr Gunner said.

"That's why the Territory Labor Government is investing $1.1 billion into remote housing over 10 years.

"The Federal Government has also got on board with this investment, with $550 million of its own, although they are yet to deliver on this commitment.

"In this term of Government, we have built or fully upgraded 1,321 houses in remote communities. By June this year, that number will hit 2,183."

Residents of Minyerri, NT, complained that houses were not being repaired. ( Supplied )

Mr Gunner did not respond to a question about whether claiming 95 per cent of corrections budgets as Indigenous expenditure was in good conscience, or what plan the Government has to halt public service growth.

A spokesman for Mr Gunner included the 2017 Productivity Commission's report, which shows the NT Government spent $3.1 billion "on Aboriginal people" in 2015-16, with the proportion of total expenditure on Aboriginal services at 53 per cent.

Mr Beadman said those figures were more of a "desktop exercise" that looked at budget allocations, rather than tracing the actual dollars spent.

"They've not come clean in the precise methodology that has been adopted that comes up with 53 per cent of the money spent on 30 per cent of the population," he said.

"It's a circular argument that's gone on now for decades."

Ms Bowden said the problem was the number of executive contracts and senior managers in the public service.

"We need to look at who's actually employed for Indigenous affairs, and are they actually delivering? Or is it a fat package of administrative costs that we don't need?" she said.

"We need more delivery on the ground and less administration."

CLP 'ingenious' in passing off Indigenous funding: Chandler

Former deputy chief minister Peter Chandler said the former Country Liberals government was "ingenious" at shuffling around federal funding.

"Even in the times we were in government, there were ingenious ways of … being able to suggest that money was being spent for Indigenous affairs," he said.

"And yet when you visit places… you would clearly see and start to question yourself, 'Where is this money being spent if it's not reaching on the ground in some of these remote locations?'"

Mr Chandler said he "totally agreed" there should be more scrutiny in how the money was actually spent.

Makeshift beds have been built outside this house in an effort to combat overcrowding. ( ABC News: Nick Hose )

Outgoing NT Senator and federal Indigenous Affairs Minister Nigel Scullion said he was moving towards imposing a requirement on the NT to show where funds allocated for Indigenous disadvantage were being spent.

"As you'd expect, the NT Government are not very happy with it," he said, saying he and former Northern Land Council chief Joe Morrison met with Mr Gunner and insisted the $550 million the Commonwealth was providing for remote housing would involve Aboriginal people.

"It would be a glass jar, they would see how much went to administration, they would see how much went to Aboriginal communities, and that was agreed and that was the template for the future," Senator Scullion told ABC Radio Darwin on Tuesday.

"Sadly, as often is the case, they've now reneged on that.

"Aboriginal people around the table, having a say about those matters, independent of the Commonwealth — that's the formula.

"Aboriginal people need to be able to be there in the room to make sure the money that gets allocated to them gets allocated to them. It's beyond politics, it's beyond regimes.

"If they're in the room they will know where the money's going, whether it's going to roundabouts in Parap or whether it will actually go to build houses."

Nigel Scullion gave IAS money to the NT fishing lobby to fight Indigenous land claims. ( AAP: Mick Tsikas )

Indigenous funding for Warren Mundine's Sky News show

So why hasn't the Federal Government changed the way it disperses and monitors funds to the NT for remote disadvantage?

Why haven't the Territory's benefactors put tighter controls on where Australians' tax money is spent?

Last February, Senator Scullion called on the Chief Minister to participate in a Commonwealth review of how federal funds are spent in the NT.

Mr Gunner refused, claiming that the estimated $2 billion reduction in GST for the NT over the forward estimates would be devastating and would affect its "capacity to invest in closing the gap outcomes between Aboriginal and non-Aboriginal Territorians".

He said he would not allocate a single NT public servant to take part in the funding review because of the Commonwealth's deep cuts to the NT's revenue.

Senator Scullion did not respond to a question about whether the Coalition Government would consider changing the way it distributes funds to the NT.

Ms Bowden suggested Senator Scullion's creative use of Indigenous Advancement Strategy (IAS) money was part of the problem.

Late last year, it was revealed Senator Scullion awarded IAS money to the NT fishing lobby to mount legal arguments against Indigenous land claims, and gave IAS cash to a company that employs the new Country Liberals president.

Recent reports show that Liberal candidate and businessman Warren Mundine received more than $200,000 in taxpayer-funded IAS money for his Sky News program.

"These are examples of why the Federal Government needs to be held accountable as well," Ms Bowden said.

Michael Gunner said the NT would not participate in a federal review. ( ABC News: Mitchell Woolnough )

Call for accountability to go unheeded

Her solution is accountability: for the NT and Federal Governments to set up a proper overseeing body that reports on how much Indigenous funding is provided and where the money is spent, and, in keeping with the NT Government's commitment to increase local decision-making, to commit to five years' worth of funding to ensure local Aboriginal communities have a say in where it goes.

Mr Beadman said the chances of that happening were slim, and that transformative change required the Federal Government to take an active approach to fixing the NT.

"The Commonwealth can't stand back like Pontius Pilate in relation to all of this," he said.

"The Commonwealth handed over to the Territory a massive infrastructure deficit at the time of self-government in 1978.

"The money we get on a needs-adjusted basis … in theory can only deliver a basic level of services across the Northern Territory — it does not and has never been intended to address the backlog of infrastructure in the bush."

So, what can be done right now?

"Nothing," Mr Beadman said, saying that the states and territories do not want federal oversight on their spending and the Commonwealth is complacent.