Story from ABC News Online:

A new report being released today has found Indigenous Australians are 13 times more likely to end up in jail than the rest of the population.

The Australian National Council on Drugs is urging the federal and state governments to drastically change the way Indigenous people are treated in the criminal justice system.

It says the system is failing to help Indigenous offenders with drug and alcohol problems.

The report found a clear link between drug and alcohol abuse and the over-representation of Indigenous people in jail.

The council's executive director, Gino Vumbaca, says almost a quarter of male prisoners, a third of female prisoners, and half of all juveniles detained are Indigenous.

"We also know that some of the figures coming through from the institute of criminology are showing us that a fair proportion of Indigenous prisoners are actually intoxicated at the time of their offence," he said.

"And a lot of them actually attribute their offences to their dependence on alcohol and drugs."

Mr Vumbaca says the report estimates that it costs taxpayers $269 a day to keep a person in jail, whereas residential rehabilitation costs about $98 a day.

"Invest in treatment," he said.

"Treatment is a far better option and a far more effective option than building prison cells. Build treatment centres, invest in that. Give Indigenous people the power and the opportunity to actually deal with their problems in a much more effective way, a much more positive way."

Associate Professor Ted Wilkes is a member of Western Australia's Nyungar community and the chairman of the council's National Indigenous Drug and Alcohol Committee.

He says, from an Aboriginal perspective, the system is broken.

"It's not working for Aboriginal Australians," he said.

"It's been set up to look after the mainstream. Aboriginal people don't fit into the mainstream, we live on the margins. And consequently this system needs major repairs. We don't want these statistics and these incarceration rates around when our grandchildren turn into adults."

The report makes a number of recommendations, including the creation of educational support funds for every young Indigenous person, as well as diversion programs specifically designed for Indigenous offenders.

Mr Wilkes says mainstream diversion programs to get offenders out of the criminal justice system and into healthcare are often unavailable to Indigenous people.

"If you've got a criminal record, you're out, it's like the two strikes and you're out on this one," he said.

"Things like you have to plead guilty if you're going to go to these diversion programs. I'm not sure whether throughout the country the [Aboriginal Legal Services] have a policy where most of the clients of Aboriginal Legal Service are encouraged to plead not guilty in the first instance, whether those sort of little things might have an impact.

"We need to find out why our people aren't accessing the current diversion initiatives. Let's give our young people a chance to turn into adults in this country, and know what's good and bad, and know what's right and wrong, have informed knowledge about what they can do to create good pathways and quality life for themselves."