Director of Coo-ee Art Gallery in Sydney, Adrian Newstead, said in a new book that artists received none of the royalties they are entitled.
Sunshine Coast based artist Kurun Warun has painted dozens of artworks but only ever received a royalty payment on one occasion from a Melbourne dealer.
"He decided he wanted to sell some art too, because it's a passion. So he bought paintings off me and then he on-sells them. He's like a broker. And he's the only one that I've ever received money through the royalties scheme," Mr Warun said.
The resale royalties scheme was set up by the previous Labor government in 2010.
The scheme states that artists are entitled to receive a five per cent royalty each time their work is sold.
But Mr Newstead said that royalties rarely reach the artists.
"The resale royalties scheme is fatally flawed from the outset," he said. "I speak to dozens, hundreds of artists and they say they've never received a penny. It was originally set up to address Indigenous disadvantage, and if it fails that test then it should be scrapped altogether, and believe me it completely fails that test on every objective point."
He argued this case against the scheme in his new book, "The Dealer is the Devil."
Mr Newstead said the book title should not be taken seriously, and that majority of dealings in the Indigenous art industry were fair.
But he doubted that fairness always prevailed.
"There were people that bought paintings for take-away chicken. There were people that paid artists with Viagra and other drugs. I have no doubt about that," said Mr Newstead.
His book explores the history of Indigenous art from the perspective of an "insider".
He said the rise of the contemporary Aboriginal art movement over the last 30 years had been the most important period in Australian art history.