Needles have been found in strawberries in all six states, with New Zealand announcing this week it would pull the Australian-grown fruit from its supermarket shelves.
"Someone who has an offence for forgery or theft of Commonwealth property, they now get 10 years".
That would make the penalty on par with crimes such as child pornography and financing terrorism, he said.
Attorney-General Christian Porter will introduce the new measures to Parliament tomorrow morning.
The sabotage has also spread to the state of Western Australia. The government wants the changes legislated by the end of the week.
Strawberry prices have plummeted all around Australia, with prices in some are now below production costs, which will affect next year's crops as well, as some growers will probably be unable to break even this year.
New Zealand imports Australian strawberries when they are out of season locally from April to September, and both chains say the home-grown product will be on supermarket shelves soon.
Consumers across Australia have reported finding needles stuck in their strawberries, as the government launches a federal investigation and growers install metal detectors to try to stop the contamination.
Queensland police have issued a $100,000 reward for information.
"Just go back to buying strawberries like you used to and take the precautions that you should", Morrison told Australians in a televised address.
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Police in Queensland believe the discovery of a "thin metal object" in a supermarket strawberry basket last week was likely a copycat incident.
Others fear the rising number of cases is down to copycats.
"This is something with which the growers have expressed their anger and frustration and I couldn't agree more", Ms Palaszczuk said.
But with demand plunging, strawberry farmers have been forced to dump produce, casting a shadow over an industry worth A$160 million (£121 m).
On Monday, a Kelmscott family said they found a needle inside a punnet of strawberries bought from their local Woolworths, just hours after WA Police revealed a similar case had been reported in York.
"They will be treated as contamination, which is a serious offence and carries 10 years in jail".
No-one has been charged in relation to the tampering.
"Hang in there with us and our saying will be "cut it up, don't cut us out", Growcom chief executive David Thomson said.
"They put all their money and effort in to build such a successful business", she said.
Authorities are struggling to contain the strawberry contamination scare, with the home affairs minister, Peter Dutton, confirming there have now been more than 100 reports of fruit being contaminated.