Locking up Aboriginal children costs Australia almost a quarter of a billion dollars a year, according to new figures compiled by Save the Children and released on the eve of Close the Gap Day.
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On an average day last June, there were 480 Indigenous young people behind bars, with each young person costing authorities $1355 a day.
Government data shows that Indigenous young people are 26 times more likely to be incarcerated than non-Indigenous young people. Most of those Indigenous young people in detention are yet to be sentenced.
And according to the most recent snapshot, Indigenous young people made up 54 per cent of young people in youth justice detention last June, despite comprising about 5 per cent of the population.
Save the Children's director of policy and public affairs, Mat Tinkler, described the situation as "a stain on our nation".
"The financial impact is also shocking," he said. "It costs more than $1300 per day to detain a young person, which means $236 million is spent each year on keeping Indigenous youth behind bars."
In its budget submission to the Turnbull government, the aid agency has called for $300 million in funding to be immediately channelled into Indigenous programs, particularly those that reduce the rate of incarceration of Aboriginal and Torres Strait Islander young people.
"We know that young offenders often end up in adult prison, so it's critical we break the cycle and help give young people a better future," Mr Tinkler said.
"It clearly makes moral and financial sense to dramatically reduce the number of young Aboriginal and Torres Strait Islanders locked up in youth detention. We want to see taxpayer funds invested in programs that prevent youth offending and help Indigenous young people build brighter futures, not paying for prison cells."
Save the Children has also backed the long-running campaign to have justice targets included in the Closing the Gap measures – an ambition harboured by Indigenous activists for years.
Closing the Gap campaign co-chair Jackie Huggins told Fairfax Media the figures were "soul-destroying", and said there was clear evidence young people were being disproportionately targeted by police.
"The mere fact that we are so disproportionately over-represented in the system itself is a national disgrace," Dr Huggins said. "What are we doing to prevent this and provide support to families and communities? An Aboriginal man can expect to go to prison more than he can expect to go to university."
Closing the Gap was launched in 2008 as a measure to reduce Aboriginal disadvantage, particularly in health.
But last month, the latest report showed Australia is not on track to close the life expectancy gap between Indigenous and non-Indigenous Australians by 2030.
Amid warnings from Aboriginal leaders that the Closing the Gap project is doomed to fail without radical change, Prime Minister Malcolm Turnbull conceded that the annual Closing the Gap report showed that much more work was needed to meet seven agreed health, education and employment targets.
