The West Australian Government is under fire over its compensation offer to pay lost wages to thousands of the state's Indigenous workers.

In March, the state government announced a six-month time period for former workers to apply for wages withheld by the government in what has become known as the stolen wages case.

Between 1905 and 1972, the government withheld up to three-quarters of the wages earned by workers on state-run Native Welfare Settlements.

The monies were put into government trust accounts with the promise that they would later be rightfully dispersed.

But that never happened. The monies disappeared into government coffers, and so did, seemingly, the financial records.

State Indigenous Affairs Minister Peter Collier estimates about 1,500 former workers across the state will qualify for the compensation offer.

But the ABC's Landline program has uncovered major flaws in the scheme's implementation.

Throughout the Kimberley region, in the state's north-west, most of the former workers interviewed by Landline knew nothing of the compensation offer.

Others, now elderly men who had mostly worked in their younger years as stockmen in the cattle industry, complained of having difficulty filling out the application forms.

Many of the workers are illiterate and for many English is a second language.

Steve Carter of the Aboriginal Legal Service at Fitzroy Crossing says the money on offer – a maximum payout per person of $2,000 – is paltry.

He has spent the past few months trying to convey details of the compensation offer to about 16 remote Aboriginal communities in the Fitzroy Valley.

He says the State Government’s attempt to redress an injustice to his people has come far too late.

"How do you compensate people that actually suffered and worked long hours and this was going on seven days a week, months and months and months," he said.

"These people worked from daylight in the morning till dark at night, just for clothing, food and a bit of tobacco?

"How do you put a figure on the suffering they went through?"

Mr Carter also criticised the six-month time frame for settling claims as far too short.

Last week, Mr Collier extended the deadline of the application period until November 30 this year.

"Throughout the application period, the Department of Indigenous Affairs has been working alongside stakeholders to ensure all of those eligible for the payment submit an application," he said.

"Some of these stakeholders have asked that the time frame for applying be extended."

'Absolute insult'

Dr Ros Kidd, an historian whose investigations into the management of Queensland’s Indigenous workers sparked a Federal Senate inquiry in 2006, has also lambasted the offer.

"I think it’s a disgusting amount and I think it’s an absolute insult to families, many of whom have worked across generations, to be offered $2,000 as full payment," she said.

"If we look at the mineral wealth of WA, I think their 2011-2012 income from mining royalties alone was $4.68 billion, according to the website.

"That $2,000 represents less than three days’ salary of the minister, so you’re looking at a pathetic crumb in the back of the cupboard, you’re not looking at any sort of dignified response to right such a horrendous human rights abuse."

But Mr Collier has defended the compensation offer.

"Look I can understand why some people will be critical of the amount that was provided," he said.

"We provide as a Government $3 million for the process, and that allocates around $2,000 per person and I appreciate that some people will be disappointed.

"You’re talking about a period, literally from 1905 to 1972, so it was a long time ago.

"Accurate records are very, very difficult to ascertain. I’m very disappointed that it has taken so long."

Dr Kidd believes the stolen wages cases will eventually be pursued and through the courts, as has recently happened in similar cases in the United States.

"You’ve got a massive defrauding of the poorest people in our nation, who were made against their will, utterly dependent on governments and you’ve got this fraud by governments of these people," she said.

"It’s no wonder there’s such entrenched poverty when this happens across generations after generation of people."

Watch Tim Lee's full report on Landline this Sunday at noon on ABC1.