The Australian Council of Social Service says the Federal Government's plan to direct-debit family payments addresses symptoms, not the problem.
ACOSS says the money would be better spent on providing more services for low-income families to avoid crises.
The federal families minister, Mal Brough, says many children suffer neglect because their parents do not spend the money on essentials.
But ACOSS's president, Lin Hatfield, says micromanaging household budgets will not work.
"In Australia, we already have a child-protection system. That system is a very good system. The problem is that it is not resourced well enough and there are issues of coordination across communities and levels of government and government portfolios."
"So if we're serious as a country about addressing the immediate needs of safety around children who are living with abuse and neglect, then we really need to take a good, long look at our child-protection system first off." She says.