The senator said Australia should increase its humanitarian intake of refugees, particularly the number taken directly from Indonesia and Malaysia.
Today, rescuers said they had found a 34th survivor from the sinking but held out little hope of finding any more people alive.
The search resumed at 7am local time (1100 AEDT), with an Australian navy patrol boat and a surveillance aircraft due to join the operation later.
Australian Federal Police officers have been deployed from Jakarta to assist the investigation, at the request of the Indonesian National Police.
The death toll was expected to exceed 150, with authorities concerned that as many as 40 children might have perished when the boat sank in rough seas on Saturday.
The survivors were taken to an immigration facility in the town of Blitar, about 170km from Surabaya, the capital of East Java.
Senator Hanson-Young said the Greens stood by their support for onshore processing of asylum seekers in Australia, despite the latest boat tragedy.
"You don't deter people who are fleeing for their lives from reaching safety by locking them up, incarcerating them and driving them mad," she said.
"Which is what we have done in the past."
- AAP