Experts have cautioned federal politicians against drug-testing welfare recipients, arguing half of the people currently seeking treatment can't get access.
The Morrison government on Wednesday reintroduced to parliament legislation to enable the drug-testing of 5000 Newstart and Youth Allowance recipients.
"The community has the right to expect that taxpayer-funded welfare payments are not being used to fund drug and alcohol addiction," government minister Ben Morton told the lower house.
People who test positive for illicit substances would be moved onto cashless welfare cards, and anyone who fails twice would be offered drug counselling.
The two-year trial would take place across three trial sites.
Representatives of peak health and welfare groups were in Canberra urging MPs and senators to plug existing shortfalls in the drug and alcohol sector.
They said the system is already at capacity treating 200,000 Australians with addictions, and are calling for an extra $1.2 billion in annual funding to meet demand for an extra 200,000.
Kings Cross Safe Injecting Room medical director Dr Marianne Jauncey said half of the people seeking drug treatment couldn't get it.
"[If you see] two members of your family, ask yourself, how are you going to choose which is the one that's going to get treated?" Dr Jauncey said.
She said money spent on implementing the tests would be better spent on funding treatment, saying $1.2 billion was not a lot of money compared to the government's total welfare spend.
"We've never punished anybody into getting better," Dr Jauncey said.
St Vincent's chief executive Toby Hall said services were unevenly distributed, crisis-oriented and poorly integrated with other programs.
Labor social services spokeswoman Linda Burney said there was no way the opposition would support the "punitive, unworkable" policy.
With Labor and the Greens opposed to the plan, the government will need support from the Senate crossbench, and experts are pleading with them to reject the proposal.
Labor is also opposed to the government's desires to roll out cashless welfare cards nationally.
The coalition is yet to reveal draft laws to that end, but Government Services Minister Stuart Robert introduced legislation to the lower house on Wednesday to extend trials of the card in existing areas for another year until June 2021.
The draft laws also give effect to cashless debit card trials across the Northern Territory and in Cape York, to begin April next year.
The cashless welfare cards quarantine 80 per cent of payments so the money can only be spent on essential items.
Ms Burney said the technology should only be expanded on a case-by-case basis, describing the evaluation of existing trials as "quite inadequate".
"If a community has proper consultation and proper consent, and that community wants the cards, then Labor would not stand in the way," she told ABC radio.
"But we do not support a national rollout of this card."
