A NSW government plan to overturn Aboriginal disadvantage hasn't delivered the intended improvements to living standards, the auditor-general has found.
The disadvantage experienced by NSW's 160,000 Aboriginal people was still "substantial", Auditor-General Peter Achterstraat said on Wednesday.
"Despite the best of intentions, the plan has failed to deliver the overall outcomes that were intended," he told reporters.
"Sadly, literacy and numeracy rates remain high, unemployment rates remain high, and living conditions only improved marginally.
"For example, the unemployment rate for Aboriginal people is at least three times higher than the rate for all NSW residents, and hospital admissions for diabetes are also around three times higher."
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Mr Achterstraat's report was into the 10-year Two Ways Together plan, introduced in 2003, which was meant to overcome disadvantage suffered by Aboriginal people and communities.
It was designed to better co-ordinate government service delivery in seven areas: health, housing, education, justice, economic development, families and young people, and culture and heritage.
Mr Achterstraat said the plan had raised awareness of such disadvantage and led to some improvement.
But despite "the best of intentions" it had not significantly bettered living standards for the state's indigenous people.
Mr Achterstraat also found accountability was "unclear" for the $240 million spent by various government departments on services for Aboriginal people.
"Government departments that are given money for Aboriginal specific programs need to tell the community how they've spent the money and what was actually achieved," he said.
Despite the failings of the Two Ways plan, Mr Achterstraat believed the program was worth continuing.
"There are green shoots, activity is starting to occur, but we need to nurture this and keep it going," he said.
"Entrenched disadvantage does take a long time to overcome because you've got a variety of factors. You've got health issues, you've got education issues and you've got employment issues.
"One leads to the other, and they all need to be addressed."
Mr Achterstraat recommended the appointment of an independent "champion" to oversee the co-ordination and accountability of spending on Aboriginal services.
Government departments delivering programs to indigenous people should also begin detailing how much money was spent, and the outcomes achieved, he said.
NSW Premier Barry O'Farrell accused the former Labor government of failing Aboriginal communities, and pledged to take the auditor-general's findings "extremely seriously".
"My government will talk openly and honestly with Aboriginal people about the challenges that we jointly face and how to ensure that the mistakes of the previous government are not repeated, he said.
