All beneficiaries are now also required to let Work and Income (WINZ) know about their travel plans in advance, or their benefit is stopped on departure.
Figures released by the Ministry of Social Development show that since the changes took hold, 328 Rotorua benefits were suspended when recipients failed to notify WINZ about their travel.
Rotorua People's Union spokesman Paul Blair said he regularly dealt with people who had forgotten to notify WINZ when they went overseas and "freaked out" when they returned to find their benefit cut.
He said under the old rules those people could notify WINZ when they got back and keep their benefit. He would like to see that discretion retained.
"There has to be rules," Mr Blair said. "But they need to be tempered with compassion and discretion."
He said many beneficiaries travelled to Australia to visit family "usually because their Aussie cousins paid for it".
"The way it's presented ... people think the 'bennies' are all cruising around the South Pacific on cruises."
Mr Blair said he believed the rules were a way of further "demonising" beneficiaries.
Rotorua district councillor and long-time families advocate Merepeka Raukawa-Tait said "of course" beneficiaries should be free to travel.
"Just because you are on a benefit doesn't mean you are on someone's naughty list," she said.
If they could save their money or someone wanted to shout them a trip, then "why not", she said.
Mrs Raukawa-Tait said people should let WINZ know, but even jobseekers should be allowed a break.
"If there's not the jobs it's very demoralising constantly looking for jobs."
Rotorua Salvation Army captain Brian Martin said he hadn't encountered any beneficiaries who had lost their benefit for travelling.
"I know it's happened, and I'm aware of the Government regulations but nobody's actually written that on their form," he said.
"It could be the root of a problem, but people haven't actually come out and [told] us. I wonder if it could be an aspect of, 'Will they help us still?"'
As of April this year, more than 21,000 Kiwis had their benefits cut for travelling overseas.
The largest group of suspensions were the nearly 11,200 people on job-seeker benefits, followed by more than 4800 sole parents, Social Development Minister Paula Bennett said at the time.
The changes had saved the country more than $10.5 million in suspended payments, she said.
Ministry of Social Development deputy chief executive Debbie Power said while the rules were tighter, they still allowed for overseas travel on "compassionate grounds".
This included allowing people with no work obligations, such as those collecting assistance for caring for someone injured or disabled, to travel for up to 28 days out of the 52-week period.
But for everyone else, "the new rules reinforce that people should be ready and available for work, not prioritising travel," Ms Power said.
- Additional reporting Cassandra Mason
