Aboriginal leader and head of Tony Abbott's Indigenous Advisory Council Warren Mundine has agreed that much of the government money hasn't reached the communities it is intended for.
Mr Georgatos said the sum is a gross overestimate.
He argues the real figure of Indigenous spending in government is closer to $1 billion.
This year's Productivity Commission figures revealed that $3.2 billion is being spent on Indigenous law-and-order and corrective services.
"What they've dropped in there is basically a corrective services budget, incarcerating people, law and order issues, that doesn’t address Indigenous disadvantage. Those spends are shameful and disgraceful to have been included in there," Mr Georgatos said.
The figures also state there is $3.1 billion being spent annually on Indigenous education.
But per student, Mr Georgatos argued there was little difference between money being spent on Aboriginal and non-Aboriginal children.
According to Mr Georgatos, there's a host of other areas where the productivity figures are misleading, and simply aren’t credible.
Land rights campaigner Tiga Bayles has supported this claim.