A return to the old level of the JobSeeker dole payment could see recipients trying to live on $7 a day after paying rent.
A survey by Anglicare Australia found the temporary increases during the COVID-19 pandemic are helping people to eat properly.
JobSeeker, formally known as Newstart, is being boosted by the coronavirus supplement but that ends in March.
It was $550 a fortnight at the start of the pandemic but it has shrunk to $250 and will be further reduced to $150 per fortnight from January 1 subject to the passage of legislation.
Before the supplement, almost three quarters of people on the dole skipped meals every week, with most missing an average of three to four meals over seven days.
Few people (13 per cent) surveyed between July and November thought their Centrelink obligations to get the dole were helping them find paid work.
Nearly four in five thought they were pointless, while around three quarters want to do Centrelink activities that are fair and lead to work.
Anglicare Australia’s executive director Kasy Chambers says the survey shows there needs to be an overhaul of the system and the rate of JobSeeker should be raised for good.
“It should be a scandal that so many people were forced to skip meals so often,” she said on Tuesday.
“Some people we surveyed were couch surfing and skipping meals every day. With so little money, they simply had no choice.”
Ms Chambers said raising the rate for good would stop condemning people to a lift of poverty.
The survey also shows there is a need to overhaul the system as it is not leading to work.
Meanwhile, the government has a Senate battle on its hands over plans to make the cashless welfare card permanent in its current trial areas and to move more than 20,000 people in the Northern Territory to the system.
The deciding vote is expected to be from independent senator Rex Patrick, who has been visiting affected areas to understand views of the card on the ground.
The underpinning bill narrowly made its way through the lower house on Monday evening with 62 votes to 61.
Liberal MP Bridget Archer – who has publicly rebuked the policy – chose not to vote.
The cards freeze the majority of welfare payments so the money can’t be withdrawn for cash or spent on items the government deems unessential, in a bid to stop spending on alcohol, gambling and drugs.
If the bill does not pass the current trials in South Australia, Western Australia and Queensland will end on December 31.