The Morrison government has rejected the opposition's proposal designed to fuel sluggish immunisation rates.
Finance Minister Simon Birmingham described the announcement as insulting to millions of Australians who had already received a shot.
"The evidence says that it's unnecessary and unlikely to work," he told the ABC on Tuesday.
Australia remains behind the world with just over 19 per cent of people over 16 fully vaccinated against coronavirus. Labor is calling on the government to provide a one-off $300 payment to all people fully vaccinated by December 1 including those already immunised.
The coalition favours incentives like giving vaccinated people greater freedoms and partnering with the private sector to offer bonuses. Senator Birmingham said schemes in Canada and the United Kingdom, where vaccination rates are high, were a better option.
"They used some targeted incentives in careful, targeted ways to help get people over the line, but not this type of broad-brush scatter gun approach," he said.
Opposition Leader Anthony Albanese said his plan would give the rollout a much-needed shot in the arm for businesses and workers struggling under lockdowns.
"The government has failed on its two jobs this year, the rollout of the vaccine and fixing quarantine," he said.
"It needs to use every measure at its disposal to protect Australians and our economy."
Leading epidemiologist Mary-Louise McLaws said cash incentives were unnecessary at this stage with Australians generally good at taking up vaccines.
"I actually don't think Australians are that hesitant. There is just not enough vaccine available," she told the Nine Network.
"I would prefer that money to go to people who are really hurting financially with the lockdown."
Senator Birmingham said research by the government's behavioural economics team found financial incentives aren't the solution.
Federal and state governments have set a 70 per cent vaccine coverage target for lockdowns to be minimised and 80 per cent for them to be a thing of the past. "The faster this is achieved, the faster the recovery as we emerge from the lockdowns that are bleeding hundreds of millions of dollars a day from the nation's finances," Mr Albanese said.