The Act party wants electronic income checks for gang members to prevent them from spending any welfare money on alcohol, gambling or tobacco.
Reviews of similar schemes in Australia and New Zealand - where it applies only to young people - are split on how effective they are.
The policy is part of a raft of proposals Act is releasing today in its law and order policy document.
A 2016 Ministry of Social Development report showed 92 per cent of 3960 known gang members received a benefit at some stage over a 22-year period until the end of 2014.
More than one in five (21 per cent) of gang members were recorded by Child, Youth and Family as being the alleged perpetrators of emotional abuse of children; 7 per cent were recorded as having allegedly neglected children.
Act's social development spokeswoman, Karen Chhour, said the policy was aimed at reducing this neglect, which would now affect far more children because the number of gang members has since doubled to about 8000.
"The children affected by gang criminality are not at fault and deserve support," Chhour said.
"Act will ensure the children of gang members are less likely to suffer neglect by requiring gang members who receive a benefit to undergo electronic income management."
Gang members would receive their benefit in the form of an electronic card that would restrict spending on alcohol, gambling and tobacco, she said.
"The money provided by taxpayers will need to go towards food and other essentials."
Act's social development spokeswoman, Karen Chhour.
Similar income management schemes have been used in Australia since 2007.
A scheme has also been used in New Zealand since 2012, where rent and utility bills are paid directly to the provider. It applies to 16- to 19-year-old parents who receive Young Parent Payment (YPP), and 16- and 17-year-olds who cannot live with their parents and receive a Youth Payment.
A 2020 comparative study - funded by the Australian Research Council - found that the policy was "making life harder for many Australian and New Zealand benefit recipients".
"Notwithstanding some individual success stories", the study found welfare recipients were excluded from participating in their communities "by reducing their accessible income and consumer choices, reinforcing damaging stereotypes that shape their social interactions, and corroding their mental health and emotion wellbeing".
A 2017 study by Orima Research into a trial of the policy in the Ceduna region, in South Australia, and the East Kimberley region, in Western Australia, found "considerable positive impact".
The trial "has been effective in reducing alcohol consumption and gambling in both trial sites and [is] also suggestive of a reduction in the use of illegal drugs".
It also found some evidence of a reduction in violence and harm related to alcohol consumption, illegal drug use and gambling.
A 2020 article in Australian Social Work found "no substantive impact" on gambling and intoxicant abuse levels.
It found an increased spend on healthy foods, but a bigger increase on less healthy foods.
"Impacts on crime and emergency department presentations were not substantively found. We conclude that targeting individual choices may not be as effective as policies targeting the historical social structures that serve as antecedents to such social pathologies."
Chhour said Act's policy was targeted to a high-risk group.
"It's based on a similar Australian policy which has seen reductions in the use of alcohol and drugs, less gambling, better child-care outcomes, better budgeting outcomes and reduction of harmful behaviour."