National director Gary Hyland said there would be $37 billion in tax cuts over the next four years but it would take just $1.2 billion to meet the funding shortfall to indigenous communities.
"While the government might be in surplus, indigenous communities still tragically remain in deficit as a result of this budget," he said.
"It would appear that the government is content to continue allowing Aboriginal children to die 17 years before non-indigenous children."
Australia's reconciliation body says tax cuts will do little to help Aboriginal people.
Reconciliation Australia chief executive Barbara Livesey says the government has missed an opportunity to make a change in indigenous health.
While there are some small and positive measures for indigenous Australians she says the A$37 billion in tax cuts will do little to close the 17-year gap in life expectancy that continues to exist between indigenous and non-indigenous Australians.