The federal Coalition is trying to introduce the cashless cards into the Northern Territory, which greatly restrict what a person can spend Centrelink payments on including bans on alcohol, gambling and withdrawing cash.

Danila Dilba Health Service CEO Olga Havnen said there was an "astonishing" lack of credible evidence that income management had improved the health and wellbeing of recipients including child protection or violence.

"You can see the impact this card has potentially had on kids and particularly infants, with falling birth weights and a decline in school attendance," she told the Senate community affairs committee at a hearing in Darwin.

"Here we are 12 years on and those things don't seem to have improved and I think it's highly problematic.

"This is a failed experiment and should be abandoned. These numerous so-called trials are an expensive, ineffective failure that has caused untold misery and hardship."

Menzies School of Health's Professor Sven Silburn told the inquiry he established that birth weights dropped by 100 grams and school attendance rates declined in 2007 in communities that were acquired and had welfare restrictions imposed during the controversial Howard Government intervention.

A lack of access to money through the income management Basics Cards was cited as a possible reason.

The national trial of the cashless welfare cards is in its fourth year but there are more than 23,000 Territorians currently on the still restrictive Basics Cards dating back to the intervention.

The cards are being trialled in four sites: Ceduna in South Australia, Kununurra and the Goldfields in Western Australia, and Hervey Bay in Queensland.

If the new legislation is introduced it would mean 50 per cent of a person's welfare payments are quarantined so it can only be spent on essential items.

There is concern from opponents Families and Social Services Minister Paul Fletcher could quarantine 100 per cent.

Ms Havnen and representatives of other Aboriginal organisations said if income management was to exist it should be voluntary or target only people who clearly had problems with drugs or alcohol and their responsibilities as parents.

Shortly before the intervention, Aboriginal women living in several communities in the NT organised for part of their money to be deducted to pay for a breakfast and lunch program for their children, she said.

Ms Havenen said the program ended with the intervention with the women forced on to income management and essentially told "you're irresponsible and can't look after your kids ... it was an absolute slap in the face to those women".

NSW Liberal Senator Hollie Hughes questioned the criticism of the cashless cards, saying they were introduced to ensure money was spent on family essentials and she understood there had been "reductions of 40-41 per cent in the use of alcohol.

Australian Associated Press