A nation-wide rollout of a cashless welfare card would be a "disaster" for the Illawarra's most vulnerable, said Wollongong Homeless Hub manager Mandy Booker.
Momentum is building to expand the trial of the cashless debit card program - which would quarantine 80 per cent of unemployment and various other welfare payments to prevent them being spent on alcohol, drugs or gambling.
The card is part of the Morrison government's "compassionate conservative" welfare redo, which also includes a contentious plan to trial drug testing welfare recipients.
Mrs Booker said introducing any punitive measures around people's welfare was never going to be beneficial for them in the long run.
"I would not be supportive of a trial coming into the Illawarra," she said.
"I think it doesn't actually address the root cause problem of people who have got drug and alcohol issues and it also doesn't address the people on welfare payments, who are also vulnerable people in our community that are already disadvantaged.
"Some of these people can't even afford their rent, so having a punitive effect and a threat that the money is going to be taken or be micro-managed by government, I don't think will actually lead to good outcomes."
The government is hopeful the two new welfare measures will combat homelessness and long-term unemployment.
But Mrs Booker reckons the plan is impractical.
"I think there needs to be a multi approach to any welfare issues and employment and education is definitely one of them," she said.
"I think if you are going to expect people to get into employment, you need to actually make sure there is enough employment for everybody that is actually on welfare, which there is not."