John Falzon says move is part of a pattern to outsource government responsibility to charities and community groups

The federal government’s decision to strip income support and housing from asylum seekers transferred to Australia for medical treatment “beggars belief as an unprincipled act of cruelty”, the head of one of Australia’s largest charities has said.

The comments from the chief executive of the St Vincent de Paul Society, Dr John Falzon, came in response to the Department of Home Affairs targeting a cohort of up to 100 people on Thursday, transferring them to six-month bridging visas, which come with work rights, and withdrawing housing assistance and income support of about $200 a fortnight.

A group of single adults who were moved on to bridging E visas (BVEs) last year had their visas rolled over for another six months.

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Most of those targeted this week were families with young children, who were given six weeks to find new accommodation and a source of income. Others were given three weeks to find accommodation but lost income support immediately. Legal groups said those affected were very worried.

“Obviously this is going to hurt individuals very profoundly,” Falzon said.

“Already the payment level was clearly inadequate when you consider it’s less than the inadequate Newstart level, so people were struggling, facing a daily battle for survival from below the poverty line.

“To pick on this group of people and use discretionary powers by the minister to take away the little that they were entitled to just absolutely beggars belief as an unprincipled act of cruelty towards people who already bear an enormous burden of inequality.”

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The Department of Home Affairs confirmed it was ending financial assistance to “transitory persons” who had not returned to Nauru or Papua New Guinea after coming to Australia for medical treatment.

“With the exception of the most vulnerable or those who represent a security concern, transitory persons will be granted a final departure bridging E visa which requires that they must support themselves until they depart Australia,” a spokesman said.

“Individuals are expected to have departed by the time their final departure BVE expires, which is six months from its grant date.”

The spokesman said accommodation and living expenses for the affected people had been $120,000 each every year. In recent years, the cost of holding someone in offshore detention has been estimated at more than $500,000 a year.

Falzon said the department’s move was part of a pattern by the government to outsource its responsibility for vulnerable people to charities and community groups, which would now have to step in and support those who struggled to find housing or work - whether because of illness, language skills, age, or the fact they had only a six-month visa.

“On a policy level, it’s profoundly disturbing,” he said.

“This is a whittling away of the universality of our safety net using quite overtly discriminatory criteria for denying people access to the social security system that we should not be conceptualising as a privilege for some, but as a right for all.”

A spokeswoman for the UN high commission for refugees in Australia said the government’s move would leave refugees and asylum seekers “at serious risk of destitution”.

“Any removal of such basic and fundamental support could wrongly coerce the most vulnerable to return to Papua New Guinea, Nauru, or their countries of origin.”

The Labor spokesman for immigration, Shayne Neumann, said the move would not fix anything and “could lead to increased crime and poverty”.

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“Purposefully making these people destitute and homeless can only exacerbate the health conditions for which they were originally transferred to Australia,” he told Guardian Australia.

Neumann said the situation could be avoided if the home affairs minister would allow people to apply for US resettlement from here, instead of making them return to Nauru and Manus Island – a rule that has kept some of them in a legal limbo.

“Peter Dutton is the only thing standing in the way of legitimate refugees making applications to resettle in the US.” he said.

The Greens spokesman for immigration, Nick McKim, said the move was “deeply unfair” and could force people into poverty, homelessness, and exploitative work.

“Unfortunately, it is a continuation of Peter Dutton’s determination to punish migrants, particularly refugees and people seeking asylum,” he said.

“To retrospectively punish people in this way is unconscionably cruel.”