Bill Shorten

'I could live on $40 a day,' says Liberal MP amid welfare debate

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Federal Liberal MP Julia Banks thinks she could live on $40 a day as calls are made to increase dole payments in next week's budget.

Julia Banks has been labelled out-of-touch by talkback callers after saying she could live on Newstart, which leading economist Chris Richardson believes should be increased by $50 a week.

"I could live on 40 bucks a day knowing that the government is supporting me with Newstart looking for employment," Ms Banks told ABC radio.

She denied she was out-of-touch.

"I speak to constituents every day and all I can say is the dignity of having a job and finding work is what our policy is about," Ms Banks said.

Like Mr Richardson and the Greens, the Business Council of Australia also backs a rise in the allowance.

"I've been talking about this for years - you cannot live on $39 a day," chief executive Jennifer Westacott told ABC radio on Thursday.

She also wants to see more literacy and numeracy programs.

"A lot of these people are shockingly disadvantaged," she said.

Labor has committed to a "root and branch" review of welfare payments if elected.

Opposition Leader Bill Shorten has questioned how anyone in parliament could live on the dole allowance.

Asked whether the existing rate of Newstart was "cruel", Jobs Minister Michaelia Cash said the government's priority was to get people off welfare.

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