Welfare recipients will be able to apply to opt-out of the cashless welfare card system, after the senate passed an amended bill to extend trials of the scheme to 2020.
The controversial program quarantines 80 per cent of welfare payments onto a debit card which can't be used to withdraw cash or buy alcohol or gambling products.
Trials in Ceduna, the East Kimberley and the Goldfields were due to expire in July, but will now be extended by 12 months, bringing the dates into line with other trial sites in Bundaberg and Hervey Bay.
Funding for the Cape York Welfare Reform initiative was also extended until 2020.
Under an amendment proposed by Labor MP Linda Burney, welfare recipients can apply to exit the trial if they meet certain criteria.
"People who do the right thing have been unfairly stigmatised by being forced to take part in the cashless debit card trial, which is targeting behaviours that they themselves don't engage with in the first place," Ms Burney told parliament on Tuesday.
Under the new changes, welfare recipients in all trial sites can exit the scheme from July this year if they're able to demonstrate "reasonable and responsible management" of their financial affairs.
Local community panels will approve applications. Where a panel is not in place, the Department of Social Services will make the decision.
Social Services Minister Paul Fletcher said the amendment was "workable".
"We've agreed to it and the consequences that the cashless debit cards will be continuing in some areas," he told the ABC on Thursday.
'A nonsense to think this is going to work': Greens
However, Greens Senator Rachel Siewert said the opt-out process was flawed, with applicants forced to disclose private personal information to other community members.
"It is rubbish that that will help facilitate anybody to get off," Ms Siewert told NITV News.
"It’ll be extremely difficult to get off and it’ll take months, is my calculation. And the issues involved in terms of privacy in and of itself is a very significant issue.
"It’s just a nonsense to think this is going to work, and it’s a fig leaf by the opposition to justify their position."
Ms Siewert said the Greens would only support the cashless welfare scheme if recipients could opt in.
"If people want to do it voluntarily – and it’s genuinely voluntary – that’s them making a decision about how they control their money," she said.
"What people object to is this top down punitive approach that the government takes, that effectively tells people how to spend their money."
Ms Burney said while the ALP had "serious concerns" about the scheme, the parliament was obliged to extend the trials because a sudden funding cut could be "disruptive" to locals without an alternative arrangement in place.
Mr Fletcher said positive feedback from communities showed a "strong" case for extending the scheme.
In Tuesday's budget, the Morrison government allocated $129 million over four years to extend cashless welfare card trials for a further year to June 2021, despite a 2018 report by the Australian National Audit Office which labelled the government's monitoring and evaluation of the scheme as "inadequate".