THE federal government says it has no plans to increase unemployment benefits, but welfare and church groups say dole payments should be decided by an independent body using a more open process.

Employment minister Bill Shorten on Monday agreed the Newstart allowance base of $245 a week would be difficult to live on and said he knew recipients were doing it tough.

"I'm not going to stand here and say I think life is easy for people on Newstart allowance, because I don't think it is," he said.

"The Newstart allowance is incredibly low and would be difficult to live on."

But Mr Shorten said the payment level would "stay where it is for the time being."

A Senate committee met in Melbourne on Monday to consider whether the levels of the Newstart and Youth Allowance payments were adequate to support people while they sought work.

The inquiry came as Anglicare Australia, Catholic Social Services Australia, the Salvation Army and UnitingCare Australia called for a new independent commission to set the level of unemployment benefits.

The church welfare groups want an independent remuneration tribunal established, similar to the one that makes determinations on wage rises for judges and politicians, to give greater transparency to the process.

They also want payments increased by at least $50 a week, which could cost the government about $1.5 billion a year.

A new National Centre for Social and Economic Modelling report shows single people living alone and single parents on Newstart or the Youth Allowance find it hard to cover basic living costs.

Mr Shorten told reporters he was not aware of the tribunal idea but would consider it.

"The need to make sure people have a good safety net is fundamental," he told ABC television.

The Combined Pensioners and Superannuants Association (CPSA) of NSW told the senate committee that because of different indexation methods, the Newstart payment had dropped against the age pension over the years.

Newstart recipients get a base payment of $245 a week, which is $225 below the poverty line of $470 a week and $132 below the age pension of $377 a week.

"People on pensions struggle to pay for basic goods and services, with many falling below the poverty line," CPSA spokeswoman Amelia Christie said.

"Obviously, people on allowances such as Newstart struggle even more."

Catholic Social Services Australia spokesman Paul O'Callaghan said rising food and accommodation costs meant that in many cases people had no money left to buy clothes suitable for job interviews.

He urged the senate committee to recommend a remuneration tribunal for the jobless to the government.

"At the moment the (decision on payment levels) is made inside government, and we get comments like 'We just can't afford (a rise)' but it's never on the basis of transparency," Mr O'Callaghan told reporters in Canberra.

Originally published as Call for independent umpire to set dole