The Turnbull government has chosen Canterbury-Bankstown as the first of three locations for a controversial drug testing trial of new job seekers.
The selection has been driven by a high number of new welfare entrants and increasing ice-fuelled hospitalisations in the area.
Social Services Minister Christian Porter says the trial is focused on helping jobseekers overcome drug problems and secure work.
"It is not about penalising or stigmatising people who have a barrier to employment which is as serious as drug abuse," Mr Porter said.
"We want to help people in this situation. Failure to do so simply leaves people at risk of a cycle of welfare dependency."
The government plans to roll out the two-year trial across three sites from January, with about 5000 people affected including roughly 1750 from Canterbury-Bankstown.
Prime Minister Malcolm Turnbull said the trial was “all about love" and about "looking after our fellow Australians”.
“If you’ve got a friend who is on drugs, what do you want to do? You desperately want them to get off it,” he told 2Day FM on Tuesday
He said the program was not founded on evidence which showed people receiving job benefits were “2.4 times more likely to be on drugs than those in the general community”.
Labor and the Greens are opposed to the trials so the government will need support from the Senate crossbench to get the program off the ground.
The plan, which has been widely criticised by welfare advocates and medical groups since it was announced in the May budget, will test new Centrelink entrants for illicit substances including ice, ecstasy and marijuana.
Anyone who tests positive will be moved on to cashless welfare cards with their payments quarantined, while those who fail more than once will be referred to medical professionals for assessment and treatment.
Up to $10 million will be set aside to support job seekers who test positive to drug tests more than once.
Depending on the type of test a person is selected for, it will either take place at a local Centrelink centre or a nearby facility.
The government says all tests will be conducted in private by a "suitably qualified representative" from a contracted drug testing provider and the results will not be shared with police.
There are roughly 12,000 people on Newstart and Youth Allowance in Canterbury-Bankstown, which has a population of about 346,000, with about 5600 new welfare recipients in the area each year.
The number of Canterbury-Bankstown job seekers granted exemptions due to drug dependency rose 162.5 per cent in the 18 months to December 2016, according to the Department of Human Services.
And 12.1 per cent of methamphetamine-related hospitalisations for NSW residents aged 16 years and over in 2015-16 were in South-Western Sydney Local Health District facilities.
Shadow attorney-general Mark Dreyfus said there was no evidence the tests would lead to a reduction in drug use.
"On the contrary, it's likely to lead to an increase in crime, an increase in inequality and further harsh treatment of welfare recipients," he told ABC radio on Tuesday.
"The government should be looking at things which work, not simply punitive measures, because that's actually all this is."