THE right-wing economist handpicked by former prime minister John Howard to set the minimum wage has declared the dole is too low and warned that giving people so little to survive on is causing desperation and depression.

Joining an unlikely conservative push for a rise in the Newstart Allowance, Ian Harper argued its level was now so low compared with disability pensions and the basic wage that even ''hard-hearted conservatives'' were alarmed at the lack of compassion.

Right-wing economist Ian Harper says the Newstart Allowance should be increased.

Fellow conservative economist Judith Sloan argued at the recent tax summit that the dole was no longer adequate, particularly for those stuck on it for a long time.

The dole is now $245 a week, compared with $375 for the disability pension and $590 for the minimum wage. Professor Sloan said that gap would continue to grow without changes to the law, because the dole is indexed by inflation yet pensions are tied to faster-growing wages. By 2015, the dole would amount to just a third of the disability pension.