Liberal MP Julia Banks. Picture: Mick Tsikas/AAP
Liberal MP Julia Banks. Picture: Mick Tsikas/AAP

'I could live on 40 bucks a day'

A LIBERAL backbencher has sparked outrage and been branded "out of touch" for claiming she could live on $40 a day.

Julia Banks, who holds the seat of Chisholm in Melbourne's eastern suburbs, was responding to growing calls for welfare payments to be increased by $50 a week.

Opposition Leader Bill Shorten on Wednesday promised a "root-and-branch" review of Australia's welfare payments system under a Labor government, saying he wouldn't be able to live on $40 a day.

"I could, I could live on 40 bucks a day, knowing that the government is supporting me with Newstart to look for employment," Ms Banks told ABC Radio in Melbourne, saying the call to increase the rate amounted to "socialism".

Talkback callers branded the comments "completely insulting" and slammed Ms Banks as "totally out of touch". "I'm certainly not," Ms Banks said. "I speak to constituents every day and all I can say is the dignity of having a job and finding work is what our policy is about."

Sherri Prendergast, a 22-year-old Youth Allowance recipient from Hobart, challenged Ms Banks to put her money where her mouth was. "It kind of makes me wonder when was the last time that she was living off of $400 a fortnight," she told ABC Radio.

"I reckon she should give it a go. If you've never had to worry about whether you can get something as simple as toilet paper, then you're not going to know what it's like.

"If you make more money that what Newstart are getting, I'd challenge people to do it, see what it feels like. The first week you find you normally have enough to do what you need to do, but the second week is usually like hell."

The maximum fortnightly Newstart payment for singles with no children is $545.80, while the maximum fortnightly Youth Allowance payment for singles over the age of 18 who need to live away from home is $445.80.

That works out to $38.99 or $31.84 a day, compared with the $64.83 a day - or $907.60 a fortnight - for the maximum Age Pension or Disability Support Pension payment. The average full-time salary is $81,531, which works out to $223.37 a day.

"I do think there's a real problem for the government payments for the people at the very bottom of our society," Mr Shorten told a news conference on Wednesday.

"That is why Labor has proposed having a root-and-branch review of our government's payment system on Newstart and like-minded allowances and payments. Who on earth amongst the government or anyone in the parliament could live on the Newstart allowance?"

Releasing the Deloitte Access Economics Budget Monitor on Monday, economist Chris Richardson called for Australia's "embarrassingly inadequate unemployment benefits" to be lifted by $50 and immediately indexed to wages.

Australian Council of Social Services (ACOSS) chief executive Dr Cassandra Goldie backed those calls. "We know that Newstart and related payments have not been increased in real terms for 24 years, leaving around one million people battling to keep a roof over their heads and feed themselves, and hamstrung in looking for paid work," she said in a statement.

"People locked out of paid work simply cannot survive on the unemployment payment of $538.80 a fortnight. The single most effective way for the government to relieve the worst poverty is to raise the lowest social security payment."

Jobs Minister Michaelia Cash was asked if Newstart's $40 a day was "cruel" to people on unemployment benefits. "We focus very much on getting people off welfare and into work. The best form of welfare is a job," she told reporters. "It is there to provide a basic safety net for those who are looking for work who are on welfare."

According to ACOSS, 647,000 people receive the single rate of Newstart and Youth Allowance, and more than half of those live below the poverty line. Anglicare research suggests people on support payments can't afford rental properties in major cities.

A University of NSW study from 2017 found buying the basics, such as housing, food, transport, health, energy and clothing, costs a single person a minimum of $433 per week, while the single rate of Newstart was just $272.90 per week.

Social Services Minister Dan Tehan said the Coalition government had been "delivering welfare reform with a focus on getting people off welfare and into work".

"Under the Coalition, 1100 jobs are being created every day and more than 140,000 Australians have moved off welfare and into work," he said in a statement. "In contrast, under Labor, the number of Australians dependent on welfare increased by 250,000 people."

- with AAP