The Coalition’s plan to dock people’s welfare if they repeatedly fail to pay fines has been denounced as a “brutal” measure that will drive those on the lowest incomes into homelessness.

Tuesday’s federal budget delivered a string of hits for welfare recipients, as the Coalition continued its push to glean savings from its social security spending.

There was no increase to the poverty-level Newstart payment, despite the pleas of community groups, and the already overstretched Department of Human Services was targeted with 1,200 job cuts.

The Coalition’s controversial debt recovery program has been extended, and new migrants will have to wait four years, instead of the current two, before accessing Newstart.

Advocates say the most punitive measure is a plan to dock the welfare of people who are repeatedly unable to pay fines. The commonwealth would be able to make compulsory deductions from the welfare of “serial fine defaulters who have outstanding state and territory court-imposed fines”. The government would also be able to suspend or cancel welfare for anyone with an outstanding arrest warrant for a serious criminal offence.

The National Social Security Rights Network has warned the measure will compound the plight of Australia’s most disadvantaged. The network’s executive director, Leanne Ho, said it risked pushing welfare recipients into homelessness or, in some cases, prison.

It also flew in the face of programs designed to ensure the inability to pay a fine didn’t snowball into more serious problems for the lowest paid.



“The same kind of people who generally end up with an amount of fines they just can’t deal with are going to end up homeless or, in a lot of these cases, possibly in prison,” Ho told Guardian Australia.

“It’s probably one of the most urgent measures we want to discuss with the department. The reality of people’s lives when they’re in that position is that things snowball out of control, one fine leads to another, and the capacity for people to deal with those [diminishes].”

The chief executive of the Australian Council of Social Service, Cassandra Goldie, described the measure as “particularly brutal”.

“People on low incomes are just going to be sent into homelessness,” said Goldie.

“It’s completely out of touch with the reality of people on very low incomes and the capacity for people to pay these kind of fines and debt.”

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Goldie said anyone who believed last night’s budget was “victimless” was clearly out of touch.

“There are clear victims from this budget. It is not a budget for people on a low income, and it certainly doesn’t guarantee essential services,” Goldie said.

It is unclear how much the government is looking to save through the fine recovery measure. It requires negotiation with the states and territories before it can be implemented.

Quick guide 2018 budget at a glance Show Hide • Tax cuts for middle low and middle income earners with most saving between $200 and $530 a year on their tax bill through a tax offset • Ambition for a flat tax rate by 2024 of 32.5% for everyone earning between $41,000 and $200,000 • $4.5bn earmarked for roads, but major public transport projects will have to wait years for the lion's share of funding announced in the budget. $24.5 billion has been directed to new commitments, but only $4bn of that is being spent in the next four years • The controversial robodebt electronic debt recovery is to continue • Newly arrived migrants will have to wait another year to receive welfare assistance, while refugees will see their wait for Newstart doubled to 26 weeks • Superannuation funds to be banned from charging exit fees and fees for accounts under $3,000 will be limited to 3% • ABC to have its funding cut by $83.7 million over three years. Meanwhile a Captain Cook statue in Scott Morrison’s electorate is to be built at a cost of $25m • ‘Black’ economy is under the spotlight with government planning to claw back revenue it is losing to illegal tobacco. Home Affairs estimates it can earn $3.6 billion from a crackdown • Pensioners will be able to earn an additional $25 a week without reducing their pension. The pension loan scheme is also being expanded, which allows pensioners to use their homes as equity to boost their retirement incomes • $1.6bn is being spent to support an additional 14,000 additional high-level home care packages. A further $82.5m is being spent on mental health services for older Australians, including a $20m “loneliness” package, to help people “remain connected to their communities”. • New measures to help crack down on multinationals avoiding tax commitments. The government is also moving to add to previously announced measures to make sure income earned in Australia, can be taxed by Australia.

The concept could clash with state-based programs such as the work and development order scheme in New South Wales, which allows vulnerable people, including Centrelink recipients, to clear fines by completing activities instead of paying. Individuals with a mental illness, for example, can do unpaid work or undertake treatment or counselling and have their outstanding fines cleared.

Other groups, including the Federation of Ethnic Communities Councils of Australia, have criticised the extension of the migrant waiting period for welfare, which is designed to save $202.5m over five years. The government had already proposed extending the waiting period to three years, with refugees and vulnerable groups exempted, but that measure is yet to pass parliament and has been heavily scrutinised in a Senate inquiry.

On Wednesday morning, Labor also criticised the job cuts to the Department of Human Services. The party’s spokeswoman, Linda Burney, said the $50m provided to boost call centre capacity was not new money.

“This is straight up privatisation of an important service,” Burney said. “Piece by piece, the Turnbull government is selling these jobs to labour hire firms.”