Aboriginal leaders are incensed by "laughable" suggestions a major mining and manufacturing project will help close the Indigenous disadvantage gap.
The proposed development of the Middle Arm precinct, a major processing hub for gas, petrochemicals, hydrogen and carbon capture in the Northern Territory, is being probed in a Senate inquiry in Canberra.
The $1.5 billion Darwin Harbour facility has been described as a "key enabler" for Beetaloo Basin gas exports.
The NT government's submission to the inquiry claims the profits from the precinct will help address Indigenous disadvantage in the Territory.
The submission says Middle Arm will provide "essential funding" to address issues key to closing the gap including housing, education, unemployment, and poverty.
"This concentration of poor social determinants has led to a combination of excessively high rates of infectious diseases... chronic stress, mental illness and substance abuse amongst Aboriginal peoples," the submission reads.
NT Chief Minister Natasha Fyles gave the green light for the Middle Arm facility in May at the same time as lifting the gas moratorium, despite strong opposition from environmentalists, traditional owners and farmers.
Aboriginal leader and Larrakia Elder Eric Fejo said the government's claim that Middle Arm would address Indigenous issues in the NT is insulting.
"It's just laughable, do they seriously believe that?" he told AAP.
"They talk about building a petrochemical plant ripping up our country and then stand by insulting us saying it's going to benefit us."
"That's like saying we'll rip your veins out just to save your blood."
The government argues the Middle Arm facility would be a sustainable alternative to help transition the territory to renewable energy.
Tamboran Resources, a gas company planning to frack in the Beetaloo Basin, has been revealed as a major tenant of the facility.
The NT's peak conservation body said the government's submission is offensive, arguing the facility has been used purely to prop up the Beetaloo Basin "carbon bomb".
"The NT government has repeatedly failed to properly consult with Larrakia people about the Middle Arm project over many years, and many Larrakia people are openly on the record as opposing the project," NT Environment Centre director Kirsty Howey said.
"To suggest that the Middle Arm gas and petrochemical hub will somehow 'close the gap' is outrageous and offensive in the extreme."
Ms Howey said to close the gap the government should be advocating for federal funding for housing, health and education.
Ms Fyles defended her government's submission, arguing the NT is grossly underfunded and needs to find self-sufficient pathways for funding.
"I'm focused on growing our economy so that I can grow our own source revenue because for decades, we haven't seen the Commonwealth provide the appropriate funding," she said.
The Environment and Communications References Committee will hand down its report by January.
