Australians don't pay taxes to support drug use, says Social Services Minister Christian Porter.
Welfare recipients in southwest Sydney are almost certain to face drug tests after a key crossbench senator signalled his conditional support for a two-year trial.
The federal government is staring down its political foes, medical groups and welfare advocates in announcing the first of three proposed locations for its controversial scheme.
Nick Xenophon, whose trio of Senate votes will be crucial to launching the program, wants to see more details but is open to working with the government.
"We haven't got a closed mind to this, but we want to make sure that there are clear costings and outcomes and it's about helping people rather than punishing people," he told reporters in Sydney on Tuesday.
Canterbury-Bankstown has been chosen as the first of three trial sites due to the high number people signing up for welfare and the rapid growth of ice-fuelled hospitalisations in the area.
"What we are trying to do here is find ways to use the very important lever of the welfare system to drive behavioural change," Social Services Minister Christian Porter said.
"To identify people whose drug use is creating a barrier to employment and get something done about that problem."
Mr Porter said unemployed people with drug problems were cutting themselves off from job opportunities in the construction, mining and transport industries, which regularly tested staff.
He's unapologetic about catching out one-off users, saying there is no safe or lawful amount of drug intake.
Centrelink recipients will be tested for illicit substances including ice, ecstasy, marijuana and opioids.
Anyone who tests positive will have 80 per cent of their payments quarantined on a cashless welfare card for two years.
Those who fail more than once will be referred to medical professionals for assessment and treatment.
The government plans to start the trial from January, with about 5000 people affected including about 1750 from Canterbury-Bankstown, but is yet to pass legislation to back it.
Labor and the Greens are flatly opposed, so the government must court support from the Senate crossbench.
Opposition human services spokeswoman Linda Burney echoed the concerns of doctors, surgeons and charity groups, saying there was no evidence similar overseas trials had worked.
"It's punitive, it's a distraction, and it is not a well thought through policy that has any basis in medical fact," Ms Burney told AAP.
Labor is concerned the trials could plunge participants into poverty, crime and homelessness.