The Jobactive program, which has already been slated for overhaul by the government, was labelled "not fit for purpose" and "failing those it intended to serve".

A review into the rate of Newstart and whether it helps keep people out of poverty and to get a job was the first recommendation of the report, which also called for a review into the youth PaTH program.

The critical report follows an independent review last year that slammed the government's privatised job seeker program and found Jobactive was a waste of time for for employers and employees.

Requirements for job-seekers to keep their payments, such as attending meetings with service providers and applying for a minimum number of jobs, should also be revamped, the committee said.

The punitive system resulted in job-seekers choosing to take action to keep their payments, instead of steps that could help them land a job.

"Participants are missing paid employment to attend appointments with their Jobactive provider. The requirement to apply for 20 jobs every month burdens employers who are receiving masses of poor quality applications often from people who are not suited for the position."

It also recommended a recent change, where job service providers can give job-seekers demerit points that can lead to payments being reduced, be reversed so Centrelink again has oversight of the system.

The targeted compliance framework was unfairly burdening marginalised job-seekers, including Indigenous Australians and homeless people, the report found.

Financial incentives for job services providers, where payments are received when a job-seeker has been in a job for four, 12 and 26 weeks, must also be reviewed to ensure people are placed into jobs they would be able to keep long-term.

Echoing Jobs Minister Kelly O'Dwyer's acknowledgement that more needs to be done to help job-seekers, the two Liberal Senators on the committee defended the program in a dissenting report, saying around 50 per cent of participants had a job within three months of participating in Job Active.

In addition to the majority report, the Greens are calling for the targeted compliance framework, and the work for the dole program to be abolished.

"Since Jobactive started in July 2015, 5.2 million penalties have been imposed on people looking for work," Greens senator Rachel Siewert said.

"Half of those penalties were overturned by Centrelink. Under the targeted compliance framework the capacity for Centrelink to overturn penalties no longer exists, raising concerns about how many of the penalties applied by providers are in fact in error."