Philip Hannam has only been on the Newstart allowance for a month since moving from Brisbane to Canberra but he has already found it difficult to cover the cost of living.
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"It's not a lot of money to start with, and it barely just covers the bills," Mr Hannam said.
"I had a few loose ends from Brisbane where I had to dip into savings, and if anything major happens, god forbid, there would be no way to cover it."
The Evatt resident is on the allowance - of about $545 a fortnight or $39 a day - while he looks for a job. He said many on the government payment are struggling to make ends meet.
"I'm sharing a house with my brother, dad and family friend, and even splitting bills four ways is not enough to cover rent," he said.
"The vast majority need Newstart to live, otherwise we'd be homeless."
A report released this week by Deloitte Access Economics found increasing Newstart by $75 would deliver 12,000 new jobs across Australia and increase wages by 0.2 per cent.
Canberra would be one of the areas to benefit most from an increase to the allowance, receiving a boost of $30.51 million in disposable income to the ACT economy.
The Deloitte report found the ACT's consumption would grow by $42.81 million and economic output would increase by more than $18 million.
Canberra was placed 20th on a list of areas that would benefit most from a Newstart rise, with Brisbane, the Gold Coast, Moreton Bay and Logan in Queensland and Fairfield in NSW in the top five.
ACT Council of Social Services director Susan Helyar said the figures were unexpected.
"It was surprising how much people would benefit from it, including people working, in retail and the economy overall in terms of government revenue," Ms Helyar said.
"We know that a number of people on Newstart have said they don't eat three meals a day because they don't have enough for food, so that's a dire and vital benefit."
The report found that relative to the population, ACT residents were the least likely to be on Newstart, making up less than 1 per cent of the 752,000 on the government benefit.
Ms Helyar said Canberra's high cost of living made it difficult for people living on Newstart.
"While there's relatively fewer people who are unemployed in Canberra, the cost of living is high and we have rental costs second only to Sydney in terms of capital cities and the cost of transport and food are second to Darwin," she said.
Newstart was increased by $2 a week on Thursday after a decision from the federal government, with the allowance previously not rising in real terms since 1994.
ACT Chief Minister Andrew Barr called for the federal government to raise Newstart during this year's budget speech, being the first state or territory leader to publicly support an increase.
A spokeswoman for the Chief Minister said the government welcomes the findings of the report.
"It shows there is an economic as well as a moral imperative to raise the rate of Newstart," the spokeswoman said.
"This is not about the economy, it's about equality. This measure is about supporting the most vulnerable people in our community in their time of need."
The report found that increasing the allowance by $75 a week would cost the budget $3.3 billion by 2020-21, but the economy would lift by $4 billion due to extra spending.
If the allowance was to rise, Mr Hannam said it would help to pay the rising cost of bills.
"It would cover a whole lot more and would allow me to start planning for the next fortnight," he said.
