Kelly O’Dwyer has ruled out making changes to the contentious ParentsNext welfare program before the election, despite urgent calls from the employment services sector, social service and women’s groups, and Australia’s human rights watchdog.

Defending the $350m program as having the “right intention”, the jobs minister said the government would instead consider penalising providers that breached the rules.

The apparent crackdown failed to appease critics, who told a Senate inquiry on Wednesday the program needed an urgent overhaul before the election.

Launched nationally in July, the pre-employment program has forced some participants – who are receiving parenting payments, with children between six months and five – to attend storytime sessions at the library and playgroup to retain their income support.

One in five parents have faced a temporary payment suspension, although the government says most of these are restored before a person’s money falls due.

At Wednesday’s hearings, department officials described as “not acceptable” claims that women had been forced to sign privacy waivers while being placed on the program, as revealed by Guardian Australia.

On Friday, O’Dwyer told the Sydney Morning Herald the program had the “right intention” in its aim of reducing intergenerational welfare dependency.

She said some providers were not exercising “common sense” but ruled out making any legislative changes before the election.

It’s understood the government will consider punishing offending providers by suspending referrals of new participants, reducing their caseload, or cutting funding or demanding it back. Providers receive a flat rate of $600 per participant.

The minister’s decision to retain the program’s compliance measures comes despite a push from the peak body for non-profit employment services providers, Jobs Australia, which said consultants were being forced to refer parents to charities because their payments had been suspended.

The Australian Council of Social Service (Acoss) and the Australian Human Rights Commission joined that call last month, and said the program should be made voluntary.

“While action to address inappropriate provider behaviour is welcome, this won’t fix the fundamental problems in the program, including the harsh compliance regime,” Acoss’s senior policy and advocacy officer, Charmaine Crowe, said on Friday.

“The system is inflexible and relies too much on automated decision making, with severe consequences for single parents – who are mostly women – and their young children.”

Ella Buckland, who is campaigning against the program, said the crackdown on providers was “too little, too late”.

“Women and children have been left without food and she talks about ‘penalties’ for providers,” she said.

“The department has obviously lost control of the situation.”

A spokesman for O’Dwyer said the government would “consider the Senate inquiry’s recommendations when it reports to the Senate”.

The inquiry report is due on 31 March, but there is only one sitting week until the election.