The newly arrived group stunned holiday-goers when they were spotted on a far north Queensland beach before visiting a local bakery and being apprehended near a pub, Cook MP David Kempton said.
About 12 people - believed to Chinese nationals - arrived by boat at a remote camping spot before travelling to nearby Weipa on the Cape York Peninsula early on Tuesday.
A 34-year-old Taiwanese national was arrested in a supermarket car park at Weipa in on Tuesday after a community member reported suspicious activity in the area.
Police have since charged the man with one count of aggravated offence of people smuggling involving at least five persons.
He was remanded in custody after facing the Cairns Magistrates Court on Wednesday ahead of his next appearance on Thursday.
The man faces up to 20 years' imprisonment if found guilty.
Another man, 30, was also detained by police pending further inquiries.
Weipa Bakery and Cafe's Josh Lyon said the group looked calm when they ordered food and drink.
"They had a couple of burgers and a couple of cans of Coke and sat out the front - it was just another day in paradise," he told AAP.
Mr Kempton said two people had been charged with people smuggling offences and the boat arrivals had been detained by Australian Border Force.
He believed the vessel came from mainland China in what appeared to be an unsophisticated operation.
"It wasn't an asylum-seeking mission, it was actually people smuggling," he told AAP.
The group allegedly arrived at Pennefather Beach about 3am on Tuesday before being picked up in vehicles and taken to Weipa 50km away.
Their arrival had intimidated holiday-goers who weren't sure if it was running drugs or guns, Mr Kempton said.
"The Chinese nationals came ashore and, as I understand it, a pre-arranged vehicle took them into Weipa township," he said.
Mr Kempton said the group was apprehended near Weipa's Albatross Bay Resort and their arrival posed potential biosecurity risks.
"The fact that a vessel came all the way from China undetected until somebody notified the authorities, that's got to be a pretty big concern for the federal government," he said.
Mr Kempton called for a coordinated approach from Australian Border Force and Australian Federal Police that made better use of local intelligence.
"We've got fishing vessels all over Torres Strait with locals who know the islands," he said.
The ABF said it did not comment on operational matters but Police Minister Dan Purdie said Queensland authorities were assisting federal officials.
"This is an absolute embarrassment for the Albanese government. The federal government needs to secure our borders," Mr Purdie said.
Home Affairs Minister Tony Burke said Operation Sovereign Borders continued to ensure that people smuggling ventures were never successful.
