Australians on welfare are struggling to survive one of the toughest cost of living crises in decades as payments fail to cover necessities, a new report shows.
Research by Anglicare Australia shows households with the lowest incomes are bearing the brunt of the nation's worst inflationary period since the 1980s.
Despite the soaring cost of essentials such as food and housing, most Centrelink payments are only raised through indexation and are not keeping up, the report says.
Households on lower incomes spend a greater proportion of their budgets on essential items and have less capacity to absorb higher prices or reduce their discretionary spending.
The report found in the past two years, housing costs went up by 22 per cent while food and groceries prices rose 17 per cent and electricity costs 17 per cent.
"It has become clear over the past 18 months that many Australians are living too precariously to cope with the shocks brought on by rising living costs," the report says.
The charity urged the federal government to raise the rate of all social security payments above the poverty line.
It also calls for the establishment of an Independent Social Security Commission which would have the power to set and adjust income support payments based on the cost of living.
Anglicare Australia executive director Kasy Chambers said people on lower incomes had been falling behind for decades, but their pain had been exacerbated in the past two years due to skyrocketing prices.
"People on low incomes did not create Australia's cost-of-living crisis," she said.
"They shouldn't be asked to pay a higher price for it.
"We need a plan to stop the lowest-paid Australians from being pushed deeper into poverty."
She said some people got into debt to keep a roof over their heads, while others skipped meals, avoided insurance or went without other basics.
