He said the New Zealand model - based on the country's accident compensation scheme - would enable the government to provide more targeted assistance for those who need it most.
"I think it would give us better information and enable us to do a better job in terms of helping people, particularly young people. In terms of the welfare system in Australia," he said in his address at the ACOSS national conference in Brisbane.
He said such measures would redress the current situation where 1 in 2 people who receive Newstart payments stay on it beyond six months.
The model is explored in detail in the government's review of the welfare system, which Minister Andrews said will be handed down soon after Prime Minister Abbott returns from overseas.
He said new measures proposed for welfare reform will focus on early intervention.
"The reality is that most programs in amelioration come too late," he said.
He said a new expert panel to be established in the next month would advise the government on how to implement early intervention measures.
Minister Andrews said without reform the age pension is set to cost $68 billion in a decade's time.
Opposition leader Bill Shorten told the ACOSS conference that Australia risks not meeting its obligation to the vulnerable.
He condemned budget measures to introduce a GP fee, increase the pension age and tighten Newstart eligibility; saying the plans "distorts the domestic destiny of hundreds of thousands of Australian families".
"We believe in a strong and generous safety net not because it catches of all those who fall but because it also supports Australian to climb. We understand that the best investment that a nation can make is in its citizens."
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