A Newstart recipient in her 50s had her payments suspended by her employment services provider after she appeared at a Senate inquiry to argue for an increase to the payment.

At a hearing in Sydney on Friday, life on Australia’s unemployment benefit was described as “a state of fear”, “constant worry” and “stress and despair” by recipients.

Government senators were forced to confront the experiences of Newstart recipients, who told how they skipped meals, experienced homelessness and were unable to afford clothes and Christmas presents for their children due to the low rate of the payment.

“We do not want your pity but we do need your empathy,” said Nigel, who felt he was being punished for not having a job.

Leslie, who is in her 50s and has been on Newstart for 10 years, said she was breaching her mutual obligations by appearing before the inquiry. Leslie told her employment consultant about the hearing; she said they scheduled an appointment anyway, saying it was a requirement of her jobs plan.

About an hour after she finished giving evidence, Leslie told Guardian Australia she got a text. “Your payment has been suspended for not attending your provider appointment,” it read.

Leslie had been paid for the fortnight on Friday morning. But she will now have to ask her job agency to have her income support switched back on, a process welfare recipients say is not always easy.

“Why am I being punished for doing things that help my community?” she said.

Mark is a former journalist and writer who said he had won awards for his work. But twice in the past five years he had been forced on to unemployment benefits, currently about $280 a week for a single person, he told the inquiry.

“Once you get caught up in a system like Centrelink and Newstart … you’re reminded how much your own background and professional history mean nothing,” he said. “And that you are, because of the way you are treated, nothing.”

Alyx is in her 50s and has not been able to find more than a few months’ work at a time.

Karen is on Newstart with “partial capacity to work”. It means she is among the 200,000 people now deemed not sick enough for the disability support pension.

She has been homeless and forced into boarding houses. There was violence in one, and bed bugs. She needed iron transfusions at $150 each but they were not covered by Medicare, she said. She could not afford them.

Karen had heard people say Newstart should be a “trampoline not a hammock”. She called it a “poverty trap”.

Jenny lost her job in hospital administration 10 years ago. She now works once a week at St Vincent’s private hospital. Jenny went through some of her expenses: her mortgage, council rates, traffic fines, funeral insurance. Now in her mid-50s, she has taken in a boarder.

It has made things easier but the financial stress is constant. Her glasses broke and the ones she uses now are not strong enough, which makes driving dangerous. Her dog has a cough but she cannot afford the vet bills to see what is wrong.

When she hears her housemate having a long, hot shower, “it sends me into a state of fear but I can’t say anything”.

Earlier, the Australian Council of Social Service’s chief executive, Cassandra Goldie, clashed with the Liberal senator Hollie Hughes.

Goldie wondered about Scott Morrison’s slogan “The best form of welfare is a job”.

“Are we saying we don’t need a social security system?” she asked.

That riled Hughes. It was a “wild and inappropriate” claim about the government’s position, she said. But that is what people took from the phrase, Goldie replied.

Acoss said the Senate inquiry was the most important in 25 years.

The Coalition senators asked questions of Acoss – as well as the Council of the Ageing and Foodbank. When the Newstart recipients finished their statements, they fell silent.

Another witness, Zareen, 48, came to Australia in 1992 on a skilled migration visa with her little girl and a bag. Her other half was “not that great”, she said, and she was now a single parent.

“I’ve worked for the ATO, I’ve worked for the ABS, I’ve worked for the Commonwealth Bank … and yet I don’t have a job,” she said. “I’m supposed to be living on $24.65 a day. Am I supposed to be doing that for the rest of my life?”

Zareen’s hope for Christmas was to read the book Gutsy Women by Hillary Clinton and to get a job. She was not the only one to mention Christmas.

Nigel noticed the Christmas ad season had begun. Nothing in them reflected his reality.

The Labor senator Malarndirri McCarthy told the Newstart recipients: “I reckon each of you are pretty gutsy.”