Two senior federal Labor MPs are at odds over increasing dole payments.
Doug Cameron, co-convenor of the party's Left faction, says the government should increase the Newstart Allowance from its current weekly rate of $246.
Labor is engaged in an internal debate over Newstart and the decision to transfer about 84,000 single parents from the higher Parenting Payment to the dole from January 1.
The measure will save the federal budget about $727 million over four years.
Senator Cameron says the saving is not worth the pain to individuals.
"I argued continually that you shouldn't try and achieve a balanced budget off the back of weak and vulnerable people, and that argument continues," he told ABC radio on Thursday.
There was no evidence that forcing people into poverty and relying on charity was an incentive to get a job.
"People are socially excluded when they are on such low payments," Senator Cameron said.
But Mr Fitzgibbon believes there should be more targeted support for unemployed jobseekers.
Governments treated all unemployed people the same regardless of their ability or disability, educational background or geographical location, he said.
"We need to keep a safety net in place, but put resources into those who need a leg up.
"Some (in caucus) would like an across-the-board increase. I believe that's the lazy policy response."
Mr Fitzgibbon suggested Centrelink should determine what specific challenges an unemployed person faced and meet needs through such things as travel or food vouchers, or rent assistance.
He defended the government's decision to move thousands of single parents on to the Newstart Allowance once their youngest child turned eight.
"I think we make the mistake of treating all sole parents the same.
"Some are working hard and doing their best, and some are bludging on the system."
Welfare groups, the Greens and business are united in saying the basic Newstart rate, which equates to $35 a day, is too low.