The federal government should slow minimum wage growth and force young job seekers to move for work, the commission of audit says.
The commission says the minimum wage is too high by international standards and its growth needs to be contained.
It wants the government to create a minimum wage benchmark set at 44 per cent of average weekly earnings, arguing it would create more jobs, especially for young job seekers.
Job seekers aged 22 to 30, with no children or special needs, would be relocated to areas of high employment or risk losing their payments once they've been without work for a year.
The commission said the high youth unemployment rate justified that call and it was reasonable given long-term jobless now risk losing payments if they relocate to low employment areas.
Disability support pensioners under 35 or those able to work would be subject to new assessment and participation criteria established in January 2012.
Their payments would also be changed to 28 per cent of average weekly earnings and would be subject to eligibility criteria that would include the family home.
The commission also wants the federal government to cut funds for housing programs for rental assistance payments.
Rent help would be given to public housing tenants but only if the state governments start charging market rates of rent.
Unions described as "outrageous" the minimum wage recommendations, which they said would hit already struggling low-paid workers.
"The lowest paid people in this country will have decrease in their income when we know the cost of living is rising," ACTU president Ged Kearney told reporters in Melbourne.
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