Australia to reform 'racist' welfare policy

Australia plans to overhaul a policy branded by international experts as racist that restricts how Aborigines can spend their welfare cheques.

Prime Minister Kevin Rudd said today the government plans to extend the compulsory restrictions on welfare spending from Aborigines to non-indigenous people living in Australia's remote Northern Territory.

The change will depend on legislation passing by next week in the Senate where the government holds a minority of seats.

The United Nations special rapporteur on indigenous human rights, James Anaya, last year described welfare management as "demeaning" and incompatible with Australia's international obligations.