Andrew Forrest has advocated the creation of a "Healthy Welfare Card" to deliver a cashless welfare system that would prevent recipients from spending on alcohol or gambling.
Bearers of the card, which would function like an ordinary debit card but would also feature a passport-style photograph, would not be able to withdraw cash or buy items such as gift cards that could be exchanged for cash.
The card would "direct spending to purchases that sustain and support a healthy lifestyle" for welfare recipients and their children, Mr Forrest's report says.
The card proposal was developed with the assistance of executives from the Big Four Australian banks, Eftpos, Woolworths, Coles, Metcash and MasterCard and Mr Forrest believes welfare payments should be delivered through the mainstream banking system.
Technology would prevent the purchase of prohibited items, including alcohol, gambling and "illicit services".
It would be introduced for the 2.5 million Australians who receive cash welfare, including 195,000 Aboriginals, but would not include age or veteran pensioners.
"For far too long Australia has increased the risk to its most vulnerable by paying all welfare benefits in cash," the report says.
"Communities, especially remote first Australian communities, are desperate to stop the incoming tide of drugs and alcohol enabled by untied welfare cash."
Mr Forrest researched tying Aboriginal welfare to drug tests, alcohol restrictions and behavioural management but ruled them out on the grounds they were not affordable.
Welfare for young people would be overhauled, requiring access to Youth Allowance to be endorsed by a school principal. It, too, would be paid only through the Healthy Welfare Card, and would only be paid if the recipient was enrolled in training or education.
Mutual obligation requirements would be applied to welfare for all people of working age and capable of work, with discretion for exemptions tightly controlled.
The report also recommends tying Family Tax Benefits to regular school attendance.
The welfare proposals are likely to be the most contentious element of Mr Forrest's report.
They were criticised yesterday by former Labor treasurer Wayne Swan and the Greens.
"Andrew Forrest thinks a 50-yr-old who has worked all their life and & now unemployed should be income managed," Mr Swan tweeted.
WA Greens Senator Rachel Siewert said ramping up income management for 2.5 million welfare recipients was a "deeply alarming suggestion".
"Such thinking reflects Mr Forrest's lack of understanding of the lives, realities and drivers of disadvantage, and casts a long shadow over other recommendations he makes," she said.