The Coalition’s plan to cut the $4.40/week energy supplement could push thousands of Newstart recipients who are already on the brink of homelessness into poverty, according to the Council of Homeless Persons.

Kate Colvin, the council’s acting chief executive, warns the $4.40 a week payment may not sound like much but if it is abolished it will leave thousands of Newstart recipients with less than $24 a day to live on.

Departmental data – published last year in senate estimates – show that 25% of Newstart recipients in Australia (76,951 people) are in severe “rental stress”, defined as paying more than 50% of their income on rent.

That number has more than doubled in the last 15 years from 32,500 to 76,950.

Colvin says if the supplement is cut it will therefore “crush the already broken backs” of thousands of vulnerable Newstart recipients.

She says median rents in Melbourne are close to $400 a week, with Department of Health and Human Services rent data showing just 6% of all Melbourne rentals would be affordable to someone on a low income.

“When you’re looking for work, you need money to travel to job appointments, for clothing for interviews, to access the internet to search for jobs,” Colvin said.

“How can you do that on less than $24/day?” she said.

The Turnbull government plans to abolish the energy supplement for all new recipients of welfare payments or concession cards from 20 March 2017.

The supplement was introduced to compensate welfare recipients for the carbon tax, but the government wants to stop the payments and use the money to help fund the National Disability Insurance Scheme.



The government says it will save $1.3bn from the measure, which is included in its so-called “omnibus” bill.

Welfare and jobs organisations have warned the prime minister, Malcolm Turnbull, that if the supplement was abolished it would cut payments to 2.2 million people on the lowest incomes.

In a letter to Turnbull two weeks ago, they warned pensioners, sole parents, single-income families, family carers and Newstart recipients would all be hit.

“A proposal to cut the energy supplement flies in the face of an overwhelming consensus from business, unions and the community sector that the Newstart payment needs to be increased,” the letter said.

Critics say the government will create a “two-tiered” system for welfare recipients by abolishing the energy supplement because people who are newly unemployed will not be able to access it, and will therefore be paid a record low of 32% below the official poverty line.