Raising the level of Newstart is one option for the government to stimulate the economy, says Reserve Bank deputy governor Guy Debelle.
Dr Debelle told a conference organised by the welfare sector's peak body ACOSS unemployment benefits had been constant in real terms for 25 years.
Asked whether raising it could boost the economy, he said: "There are a number of things which are out there which would provide stimulus to the economy - this is one of them."
Social Services Minister Anne Ruston told the conference the government wanted to improve the lives of all Australians.
It was spending $180 billion a year on the welfare system and using innovative, targeted programs to help people get back into work, she said.
"We want to give people the tools to overcome the challenges that life will inevitably throw up from time to time and to help them take ownership of their lives," the minister told the conference in Canberra on Tuesday.
But one thing she did not mention was the $40-a-day Newstart payment.
Welfare recipient Nigel, speaking after the minister, said that was a stark omission.
"She wants disadvantaged Australians to have the opportunities to reach their goals. That would be a nice thing," he said.
"One thing they can do is to raise the rate of Newstart.
"She says she wants to improve the lives of Australians - there we go, raise the rate of Newstart.
"The government's refusal to step up is just mind-boggling."
ACOSS chief executive Cassandra Goldie said it was extraordinary that in a wealthy country like Australia there could be three million people struggling to afford the basics in life.
"I can't find anybody else outside of government who doesn't think that Newstart needs to increase," she said.
On wages, Dr Debelle told the conference they were likely to stay depressed in the foreseeable future.
He said that historically, increasing employment corresponded with a drop in unemployment.
However, the past few years were unusual in that growth in jobs had disproportionately been met by an increase in people entering the workforce, particularly women and older workers.
This surprising strength in labour supply had contributed to slow wages growth, he said.
He also noted a sharp rise in the number of enterprise agreements incorporating wages growth of 2-3 per cent suggested the sluggish rate would persist, and was unlikely to drop further.
"We expect wages growth to remain largely unchanged at its current level over the next couple of years," he said.
Australian Associated Press
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