The social services minister, Anne Ruston, has sought to play down comments in which she suggested an increase to Newstart would simply end up in the hands of drug dealers and pubs owners.

Ruston was quoted by the Murray Valley Standard as telling a single mothers forum in the South Australian Liberal stronghold of Barker that the government “can’t just keep on adding money to this bucket, because we’re not making a difference”.

“Giving [people] more money would do absolutely nothing ... probably all it would do is give drug dealers more money and give pubs more money,” the paper quoted Ruston as saying.

The comments, which have provoked outrage from welfare advocates, come as the government pursues a trial to compulsorily drug-test 5,000 welfare recipients and as it dismisses widespread calls to lift the rate of the unemployment benefit, currently about $280 per week for a single person.

On Wednesday, Ruston appeared to suggest the reporting of her remarks was “misleading”, telling Sky News she had been arguing that policymakers needed to deal with “individual barriers to employment”.

She said she had “made the comment that if somebody had an alcohol addiction, then giving them extra money on Newstart was more likely to result in that money being spent at a hotel”.

“We need to come up with more inventive and innovative ways to deal with the barriers … that is what the government is absolutely focused on doing,” she told Sky.

Ruston appeared at the forum for the Soroptimists of Murray Valley alongside the chief executive of the National Council of Single Mothers and their Children, Terese Edwards.

Edwards told Guardian Australia that Ruston had acknowledged that life was tough for Newstart recipients and praised the minister for agreeing to take up the council’s concerns about the large child support debts owed to single mothers across the country.

“But in the whole discussion, in the detailed presentation, there was a comment made about not having a limitless budget and that there were some fears about money being inappropriately used,” Edwards said.

“I need to be honest that she did say it [the comments about money going to drug dealers] but that was in the context of a 40-minute discussion.”

That appalling comment by Anne Ruston that “Giving more money would do absolutely nothing ... probably all it would do is give drug dealers more money and give pubs more money” was made at a forum for single mothers facing poverty. Disgraceful. #auspol https://t.co/dsCdrHZB3c — Emma Dawson (@DawsonEJ) October 2, 2019

Holy hell, look at what @anne_ruston just recently said at a panel about single mums in poverty: https://t.co/xVKoIkIIwT pic.twitter.com/uxpKs3gXN1 — jeremy poxon (@JeremyPoxon) October 1, 2019

As part of the forum, Ruston was shown a video produced by the Australian Council of Social Service that argued for an increase in the rate of Newstart. It includes the Newstart recipient, Juanita McLaren, who has taken the plight of Australia’s single mothers to the United Nations.

The minister is said to have made the comments in that context by suggesting that not all Newstart recipients were like those in the video, and that some faced difficulties with drugs and alcohol. The event was not recorded.

Labor’s social services spokeswoman, Linda Burney, said: “This is really disappointing base politics, that flies in the face of all evidence.”

The government has previously faced criticism for demonising welfare recipients through the selective release of welfare penalties data.

Ruston’s office was contacted for comment.