The rising number of people identifying as indigenous in Melbourne and Sydney is further increasing the disadvantage suffered by remote Aboriginals, both sides of Northern Territory politics say.
The much-maligned Commonwealth Grants Commission's (CGC) allocation of GST to the states was blamed for the Territory's severe financial woes by Labor government Treasurer Nicole Manison at hearings into public spending.
That was partly due to more city-based people identifying as Aboriginal, which then gives people access to indigenous funding through GST revenue.
They were far less disadvantaged compared to Aboriginals in remote areas but were treated the same in the allocation of taxpayer-funded indigenous spending, Ms Manison said, telling the NT Parliament Estimates Committee she had raised it with Federal Treasurer Scott Morrison and the CGC.
That funding is based on the 2016 census, which indicated the number of self-identifying Aboriginal people in NSW and Victoria had doubled since 2001.
"It is important that they recognise that an Aboriginal person's circumstances in a place like Yuendumu or Umbakumba (NT remote communities) is probably going to be very different to an Aboriginal person's circumstances living in Darwin and living in Sydney," Ms Manison told reporters.
"When they look at GST distribution and funding for the Northern Territory they need to recognise that we do have historical disadvantages, we have high levels of poverty, we have high levels of infrastructure deficits and we also have a very high proportion of people who are living in poverty and disadvantage that happen to be living in very remote parts."
"That makes delivering services and overcoming and closing the gap on indigenous disadvantage all the more challenging if you don't have the right amount of GST funding coming in to service that."
Mr Higgins said he wanted the GST formula changed to recognise the disadvantages of remote Aboriginals.
The Yothu Yindi Foundation has previously criticised the system as depriving the most disadvantaged Aboriginal people during hearings into the GST.