ACT would restrict gang members from spending their benefit on alcohol, gambling and tobacco and would limit where they could go and who they could interact with.
The party released its law and order policies on Tuesday, under the heading "smash the gangs" - with other proposals including adjusting police staffing budgets in line with population increases, and abolishing the prisoner reduction target.
"Gang numbers are up 50 percent after four years of Labour's 'kindness' approach," says ACT leader David Seymour. "We've watched as patched gang members have taken over our streets like it's them and not law-abiding taxpayers who own the place."
It comes as violent criminal behaviour directed at police is ramping up like never before, according to Police Commissioner Andrew Coster. Police are also concerned about an increase in gun incidents and offenders being more willing to use them.
ACT wants to try and reduce crime by restricting what gang members can purchase with their benefit money. Ministry of Social Development data shows nine out of every 10 gang members have received a benefit.
ACT's social development spokesperson Karen Chhour is proposing the policy to protect the children of gang members, whose parents' behaviour has nothing to do with them.
"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," Chhour says.
"Gang members would receive their benefit in the form of an electronic card that would track and restrict spending on alcohol, gambling, and tobacco. The money provided by taxpayers will need to go towards food and other essentials."
ACT would introduce electronic income management alongside Gang Injunction Orders - a proposal put forward by justice spokesperson Nicole McKee.
"Gang Injunction Orders would allow the police to apply to the Courts for an injunction against an individual on the National Gang List," McKee says.
"The injunction order could then be used to prohibit bad behaviours including being in a particular location or associating with particular people. It could also be used to require positive actions, like attending rehabilitation."
McKee says similar practices are used in the United Kingdom and United States.
ACT's Corrections spokesperson Toni Severin wants to abolish the Government's target to reduce the prison population by 30 percent over 15 years, and make rehabilitation compulsory to be eligible for parole.
"ACT opposes ideological targets which lead people getting out of prison. All that does is put more risk on the communities who have already been victimised. ACT would abolish the target," Severin says.
ACT also strongly believes in keeping the controversial Three Strikes policy Labour wants to get rid of. It means third-time serious offenders get the maximum sentence with no chance of parole.
Justice Minister Kris Faafoi confirmed last year the Government still wants Three Strikes gone, because it "hasn't made any meaningful difference to people being safer".
Labour's former coalition partner NZ First did not support repealing Three Strikes.