Migrants and their families may fall into destitution and poverty if they are forced to wait longer for welfare payments, a Senate inquiry has been warned.
Legislation before federal parliament aims to make new residents wait three years before they can access payments including family tax benefits, paid parental leave and carers allowance.
Leanne Ho, from the National Social Security Rights Network, says the bill is based on the flawed assumptions that newly-arrived migrants choose not to work, and removing income support will encourage self-sufficiency.
"It can often be difficult for migrants to secure employment in Australia, even where there is a match between the skills and experiences of a migrant and the advertised skills shortage," Ms Ho told senators in Melbourne on Tuesday.
Ms Ho told the public hearing that employers were often to blame for migrants struggling to find work, with nagging perceptions about their lack of Australian experience or language skills.
The network, which represents community legal centres helping migrants navigate access to welfare payments, is concerned they and their families will either plunge into poverty or fall prey to exploitation.
"Exploitation of migrant workers is well documented, where they will accept any substandard work conditions in order to survive, and extending the waiting period will only exacerbate their vulnerability," Ms Ho said.
"Any costs saved from extending the waiting period may well end up being costs spent in dealing with the fallout from the destitution."
Roughly 50,000 new migrant families including 110,000 children are expected to be hit by three-year wait periods for family tax benefits.
Another 30,000 individuals will be shunted onto waiting lists for other welfare payments.
Under the changes, which are expected to save $1.3 billion, the wait for Newstart and Youth Allowance will be extended from two to three years.
Alia Imtoual, from the Federation of Ethnic Communities Councils of Australia, said extending wait times and applying them to parental and family payments would create an underclass of migrants.
Dr Imtoual said two babies born in the same hospital on the same day - one to Australians and another to migrants - would be treated in vastly different ways because of the residency of their parents.
Charmaine Crowe, from the Australian Council of Social Service, says women and children will be the biggest losers.
"They are the primary beneficiaries of family tax benefits and paid parental leave, which is where the biggest cuts in this bill will be made," Ms Crowe said.
Community groups are particularly opposed to waiting periods for "special benefits" payments, which cover people facing severe financial hardship.
Department of Social Services officials told the hearing the legislation would clarify that the special benefits eligibility would be for people whose circumstances change after they gained permanent residency.
Branch manager Anita Davis said the changes would close a potential loophole for people claiming time on a tourist visa was part of their waiting period.
"It's not changing any of the policy intent," she said.