The government will save a further $200 million by making migrants wait four years before they can access some welfare benefits, and state revenues are expected to benefit from compulsory deductions from welfare recipients who don't pay fines. Mr Howard, who established the work-for-the-dole scheme, said there was a debate to be had about increasing the level of payment from $40 a day. Loading "I actually think there is an argument about that, I do," he said at the PricewaterhouseCoopers post-budget breakfast in Melbourne on Wednesday. "I was in favour of freezing that when it happened, but I think the freeze has probably gone on too long."

Mr Howard is the latest economically liberal voice to join calls for an increase after the Business Council of Australia said it was time for a rise in the wake of stronger than expected government revenues. "This is a missed opportunity to do something on Newstart," said BCA chief executive Jennifer Westacott. Ms Westacott has joined Chris Richardson from Deloitte Access Economics and Cassandra Goldie from the Australian Council of Social Services in asking the government to commit extra funding. BCA chief executive Jennifer Westacott. Credit:Alex Ellinghausen Prime Minister Malcolm Turnbull defended the policy on Wednesday, arguing it was necessary to give incentives to people "to get a job or to stay in the workforce".

Crossbench senators have indicated raising the allowance could be the key to their support for contested government measures - including the $35.6 billion remaining of the Turnbull government's signature company tax cuts. Independent Senator Derryn Hinch said he was disappointed the budget did not look at Newstart. "I think that will be the big issue this year," he said. "It will get a lot of crossbench and Labor and Greens' support." He said the majority of welfare recipients were not "20-year-old pimply kids who just don't want to work". "These are 45, 55-year-old men and women who have been made redundant," he said. "It's just wrong."

The latest figures from the Australian Bureau of Statistics show the unemployment rate was 5.5 per cent in March, with 730,200 unemployed Australians. Fellow crossbencher Tim Storer said he was disappointed that part of the boost in revenue from tax and commodities since the mid-year update had not been spent on a Newstart increase, "given it has broad support from business groups, respected economists and the welfare sector". "As the Business Council of Australia noted as far back as 2012 the level of Newstart '...may now be

so low as to represent a barrier to employment'," he said. Loading Replay Replay video Play video Play video "This is something that has been a 25-year-old problem in Australia and I think in 2019 we could be addressing that in this budget."

Labor has also not committed to raising the allowance. A Greens policy to increase increase the Newstart and Youth Allowance payment by $110 a fortnight - the amount UNSW researchers believe is needed to meet basic living standards - was costed at $2.6 billion a year. "My god, if John Howard is on board with an increase then Labor should be too," Greens senator Jordon Steele-John told ABC News. Shadow treasurer Chris Bowen said the opposition would have a "look at the implications" of a Newstart increase, as Labor leader Bill Shorten prepares to deliver his budget reply speech on Thursday.