LABOR MPs have been challenged to spend a week living on just $35 a day, after ruling out an immediate increase to the Newstart Allowance.

As a government inquiry heard overwhelming evidence that Australia's unemployment benefit was not enough to survive on, Labor held the line on its unwillingness to boost the payment.

Greens Senator Rachel Siewert who earlier this year tried living on the allowance said Labor's MPs should make an attempt to live on the meagre payment before writing off its increase.

It comes a day after Employment Minister Bill Shorten, ruling out an increase, told ABC 24 he found it hard to "make ends meet" on his current salary of about $330,000.

Mr Shorten said yesterday he was trying to make the point that it would be extremely difficult to live off $249 a week: "I think that the Newstart allowance is very low and it would be very difficult for anyone to make ends meet," he said.

When asked if he would try living on Newstart, Treasurer Wayne Swan's office pointed News Ltd to a YouTube video from 2011 where Mr Swan spent just one day day participating in the Live Below the Line campaign.

In the video, Mr Swan said poverty was "intolerable", and pointed out the fact he'd been forced to give up his morning coffee for the campaign.

In Opposition in 2005, Mr Swan wrote a book, challenging then Treasurer Peter Costello to to make a "real effort to understand the plight of the poor".

"(I) challenge the Treasurer in particular to try to live off the minimum wage and to harness that understanding for better public policies," Mr Swan wrote.

Newstart is 40 per cent below the minimum wage.



The government inquiry into the adequacy of Newstart was told Australians on the payment are spiralling into uncontrollable debt, maxing out credit cards and turning to payday lenders as they spend 122 per cent of their income each week. Deputy Australian Council of Social Services chief Tessa Boyd-Caine said Newstart hadn't been increased in real terms since 1994.

"So far only one Federal politician has experienced how tough it is to exist on the Newstart Allowance," Ms Boyd-Caine said.

"We would welcome more politicians experiencing first hand what it's like to try and live on $35 a day, how it feels to be a person on Newstart having to choose between filling a prescription and putting food on the table."

A spokesman for Mr Swan said: "The treasurer's record of protecting low income Australians speaks for itself," pointing to pension increases and creating 800,000 jobs.

Originally published as If it's so easy, you live on $35 a day