GETTING by on just $35 a day means some of Australia's poorest people are stuck on the dole, say critics of the Newstart Allowance.

The Australian Council of Social Service told news.com.au that the Newstart Allowance is now so low that people simply don't have the money in the weekly budget to get a job.

"People don't have the money they need to be able to travel, to dress themselves well, get a haircut," chief executive officer Dr Cassandra Goldie said.

"On top of that for many people the stress of worrying about food on the table or getting evicted because you can't meet your rent means that in the end you don't have the emotional resilience to pick yourself up and go to another interview."

A Committee inquiry into Newstart is due to report to Parliament today on whether the allowance is adequate.

An overwhelming majority of submissions argue that it is not, and many say it should be increased by at least $50 a week.

Dr Goldie said living on the current level of about $35 a day could cause anxiety and depression and, for some people, mean they were stuck in poverty, unable to help themselves out.

Even the Business Council of Australia argues that the dole needs to be adequate to "support active job search". In its submission it says the "Newstart allowance is now so low as to be a barrier to employment".

"Trying to survive on $35 a day is likely to erode the capacity of individuals to present themselves well or maintain their readiness for work," it reads.

"While the combined Newstart and rental allowance may tide people through relatively short periods of unemployment, for those out of work for long periods of time, such low levels of support greatly increase the risk of homelessness.

"Once homeless, job seekers are severely disadvantaged in their ability to maintain active job search and present themselves decently for job interviews."

Employment and Workplace Relations Minister Bill Shorten has conceded it would be "very, very tough" to get by on $35 a day and said that the Government had to get the balance right "between urging people to work and giving them (and their families) a measure of security if they just can't get a job".

The Federal Government agencies, in a joint interagency submission, write that the low level of the dole is an incentive for people to get work, and points out that about six in 10 new Newstart recipients get off the dole within a year.

They write that the suggested increase of $50 a week would "have a substantial fiscal cost" that "would need to be balanced against other government spending priorities and fiscal objectives".

"In addition, an increase would not assist in maintaining the fundamental character of Newstart Allowance as a payment that predominantly supports work re-engagement.

"As the OECD acknowledges, an increase in the base rate of Newstart Allowance has the distinct disadvantage of reducing employment incentives, especially for those who can only obtain low paying employment."

Today's report is on the adequacy of the payment, whether it's an appropriate level to support jobseekers, and the changing nature of the labour market.

Originally published as 'Too poor to look for work' when on the dole