Treasurer Scott Morrison selling the budget message which has received a luke warm reception from voters, Credit:Andrew Meares The rationale for the cut – which, on today's rates, would make the base payment less than $38 a day – has some surface-level merit. The government is removing an "energy supplement" that started as compensation for the now defunct carbon pricing scheme introduced under Julia Gillard. But other groups – taxpayers and people already on welfare – get to keep the compensation despite the carbon tax being dead, buried and cremated. Only people new to welfare will lose the increase. The cut to payments effectively rejects a call by last year's National Reform Summit – a meeting of business and community leaders – that income support for those looking for work needs to rise so they can "live decently and search for employment". It ignores the Business Council's four-year push for the payment to be lifted above the base level – $268.20 a week including the energy supplement, and now promised to be $4.40 less. The cut is nearly the same size as the $6 a week tax cut the budget promises taxpayers earning more than $80,000.

Australian Council of Social Service chief executive Cassandra Goldie has offered qualified praise for another key budget measure – the introduction of a 12-week paid internship program for young jobseekers and the near abolition of Work for the Dole – but says the cut was an "unconscionable decision" that will force more people below the poverty line. As this graph shows, Newstart Allowance payments have steadily decreased in relative terms over the past two decades to less than 40 per cent of the minimum wage. Source: ACOSS Newstart is increased in line with inflation. Pensions, which are pegged to wages, rise at a faster rate. KPMG says the dole should be lifted to $300 a week. In a paper released last month called Solving the Structural Deficit, the tax and auditing firm says political rhetoric on Newstart is behind community standards – a fact that is clear to "most sensible commentators".

KPMG tax centre leader Grant Wardell-Johnson says the cut suggested the government had not shifted its thinking in line with the business community. "I think it's prolonging a psychology within the government … that there are a whole bunch of dole bludgers out there and they don't deserve funds from the government," he says. "I certainly think that mindset has existed for a number of years, but it unfortunately continues." The cut comes as national youth unemployment is nearly 13 per cent. KPMG's arguments for raising the dole include that at the current level people find it hard – psychologically, but also in being simply able to properly present themselves – to compete for jobs. It says it also locks employed people into jobs they hate – and therefore in which they probably are not performing – because they fear they could not survive without their wage. The low payment is also pushing people to qualify for the Disability Support Pension – a shift that can be a psychological setback for the individual and expensive for the government. The disability pension is worth about $130 a week more than Newstart.