The federal government is hoping to keep people out of prison by extracting unpaid court fines from welfare payments.
Under a new budget measure to "encourage lawful behaviour" from people on income support, welfare recipients with outstanding court fines will have money deducted from their payments until the debt is cleared.
"This is about helping people stay out of jail and stay in employment," Social Services secretary Kathryn Campbell told a Senate estimates hearing on Thursday.
"(It is) also so people don't lose their licences when they're fundamental to their employment."
The maximum rate deducted from fortnightly payments is expected to be around 15 per cent.
Greens senator Rachel Siewert said the plans were a lazy way to address fines and incarceration, describing the proposal as "bureaucracy at its worst".
"Newstart is already so low. There is already no money to spare," Senator Siewert told AAP.
"Those with no money to pay fines and ending up in jail would avoid going to jail and pay the fines if they could, they have no leftover money after they put a roof over their head, meet necessary expenses and eat."
Under the proposed changes, people with outstanding warrants for indictable criminal offences will also have their payments suspended for up to a month - and cancelled afterwards - until they hand themselves in.
The responsible minister has written to all states and territories to begin negotiations for the opt-in scheme.
Department officials said they had intermittent discussions around fines and warrants with the states over the past few years, following several approaches from various jurisdictions.
People will first be encouraged to clear their debts with state authorities before the Commonwealth measure comes into effect.
Cassandra Goldie, from the Australian Council of Social Service, described the proposal to deduct state government fines from social security payments without agreement as unnecessary and intrusive.
The regime is intended to start in March 2019.