A Northern Territory MP has launched a blistering attack on the remote work-for-the-dole scheme, calling it “modern-day slavery” and describing life on the community development program for people in his electorate as “hunger games”.

The member for Namatjira, Chansey Paech, told NT parliament the scheme – which sees people in remote communities suspended from income support if they don’t meet their work-for-the-dole commitments – was driving Aboriginal people into poverty, out of remote communities and into major towns, where social problems arise.

“I was told by a few business people that on the occasions that they were broken into, the perpetrator did not take the expensive equipment, merchandise or cash but rather any form of food they could find,” Paech said in an adjournment speech on Tuesday.

“Why? because they’ve been pushed into town by the federal government’s own version of the Hunger Games.

“Breaching people and cutting them off any form of social welfare only results in increases in property crime as people are pushed to the limit, pushed by starvation and desperation,” he said.

According to the ANU Centre for Aboriginal Economic Policy Research, there has been a 740% increase in financial penalties since the CDP replaced the previous remote job and communities program in 2015.

Remote workers are 25 times more likely to be penalised than non-remote jobseekers, and 50 times more likely to have a serious penalty imposed, which can mean up to eight weeks with no payment.

The Indigenous affairs minister, Nigel Scullion, said the CDP was designed to “increase support for the most vulnerable jobseekers, while ensuring more job-ready participants move into work”.

But between 2015 and 2017 there has been a dramatic drop in participants “that cannot be accounted for by job placements or movement between regions”, according to Lisa Fowkes from the ANU. Almost 6,000 people may not be receiving any income support at all, Fowkes said.

Almost 60% of those disengaging with the scheme were under 25, and a further 31% were 25- to 34-year-olds.

“The disengagement of this group is extremely troubling, as they are at a critical stage for developing skills and work experience,” Fowkes said. “They’re also the group that has the highest suicide rate and are most likely to come into contact with the criminal justice system.”

There are about 35,000 CDP participants in Australia and 83% are Indigenous. As a condition of income support, remote area participants must engage in up to 25 hours of work for the dole, five days a week.

According to Paech, the scheme does break down the cycle of dependency but not in the way the federal government intends. “You can’t depend on something that you’re banned from,” Paech said.

“[CDP] cuts off the most marginalised people in the country and leaves them high and dry with no form of income for up to eight weeks.

“When you breach that mother in a remote community, you effectively cut off her ability to provide for her children, you effectively allow children to starve, you effectively start the process of an unnecessary removal of a child.

“I believe a spin-off from the punitive breaching policies of the CDP is creating a modern-day stolen generation.”

Scullion has proposed changes to the legislation, which the Greens and Labor both say they will vote against.

Under the changes, CDP participants would be subject to the same compliance measures as any other jobseekers “regardless of where they live or which government program they participate in”, Scullion said.