Welfare recipients with unpaid court fines or outstanding criminal warrants will be targeted under new hardline government measures laid out in the federal budget.
People with outstanding Centrelink debts of more than $10,000 will also be aggressively pursued as the coalition tries to claw back money from those who are no longer on welfare and have the means to pay.
"We will ensure our targeted safety net helps people when they need it, but that people receive only what they are entitled to, nothing more and nothing less," Social Services Minister Dan Tehan said in a statement on Tuesday.
"When welfare recipients have received money they are not entitled to, we will ensure those debts are repaid."
The government has outlined several measures it hopes will "encourage lawful behaviour" from people receiving income support.
Welfare recipients with outstanding court fines will have the money deducted from their payments until their debt is cleared.
People with outstanding warrants for indictable criminal offences will have their payments suspended for up to a month - and cancelled afterwards - if they do not hand themselves in.
Cassandra Goldie, from the Australian Council of Social Services, was scathing of the idea.
"The proposal to deduct state government fines from social security payments without their agreement is unnecessary, intrusive, and could leave many people homeless," Dr Goldie said.
"The ball is in the states' court to reform the system of court-ordered fines so that people are no longer imprisoned because they can't afford to pay."
Prisoners drawing a disability support pension will only be able to have their payments suspended for 13 weeks - down from two years - before the benefits are cut off.
The Turnbull government has stared down demands from a rare alliance of business, industry and community groups calling for an increase to the Newstart allowance in the budget.
The Business Council of Australia and the Australian Industry Group, among others, argued the Newstart allowance was insufficient to allow unemployed people to look for work.
Government ministers have pointed to strong jobs growth in the past 12 months to counter their argument.
"We are disappointed that this issue has been completely ignored in a budget that has both spending measures and tax cuts," Mission Australia chief executive James Toohey said.
"It is not a matter of frugality, but of calculated neglect."
The budget was also silent on demands to abandon unpopular "zombie" measures - the policy bills stranded in the Senate - including increasing the pension age to 70, axing the energy supplement and making migrants wait up to 15 years before accessing the age pension.
The controversial "robo-debt" program designed to claw back welfare overpayments will also be extended for an extra year, as the government tries to recover more than $1.2 billion in Centrelink debts.
Meanwhile, student payments for higher education loans will soon be limited to approved courses, in a move expected to save $101.1 million over five years.
Regional families will be offered some relief, with parents allowed to earn an extra $10,000 before their child's youth allowance is affected.
The government will also pump $50 million into reducing Centrelink's notoriously poor call wait times.
