The Catholic Church has chosen ‘national anti-poverty week’ to promote a powerful idea that would stop politicians using vulnerable Australians as political footballs.

Through its peak national social services body, Catholic Social Services Australia (CSSA), it has called for an independent commission to “develop evidence-based benchmarks to ensure that income support payments are adequate for people to live a frugal yet dignified life, and have realistic opportunity of securing a job”.

CSSA’s phrase “frugal yet dignified” pretty much says it all.

At present, when you’re down on your luck and jobless, the welfare system is providing something quite different – ‘desperate, under-resourced and degrading’ would sum it up better.

But much as some cranks on the right of politics will hate to hear it, depriving underemployed Australians of a dignified path back to work is not only heartless, it comes with an economic cost.

That’s particularly true in today’s employment climate – while Thursday’s employment figures showed a heartening medium-term improvement, the long-term drift towards fewer hours of work being available is widely forecast to continue.

Automation and the rise of the ‘gig economy’ are key drivers of that trend, and when combined with more normal business-cycle forces they are likely to create a growing pool of sidelined talent – including those who have jumped through every education, training and job application hoop they’ve been presented with.

The difficulty, which CSSA is tackling head-on, is the number of votes that can be harvested by creating a false us-and-them division between the employed and those choosing to “eat Cheezels and get on the Xbox” as one Liberal MP put it in 2014.

Setting welfare payment levels out of a desire to punish the mythical Cheezel-eaters is bad economic policy, even if it pleases a few hard-line voters.

The problem, as articulated by CSSA, is that unemployed workers on today’s welfare payments just can’t afford to live – not very conducive to health, motivation, or the ability to get to job interviews in good shape.

As CSSA CEO Father Frank Brennan points out: “Newstart recipients are $110 per week below the poverty line, and youth allowance recipients are $159 below the poverty line.”

To back up this claim he quotes the Business Council of Australia, which even five years ago was pointing out that Newstart “no longer meets a reasonable community standard of adequacy and may now be so low as to represent a barrier to employment”.

That kind of barrier is useful for just one thing – creating an underclass of long-term unemployed.

That creates bigger strains on the budget than welfare payments alone suggest. The long-term jobless have worse health outcomes and far higher rates of social problems, creating more demand on public health, policing and social workers.

There is also a wider macro-economic concern. In a nation as prosperous as Australia, slashing of welfare budgets – as was tried with the Abbott government’s 2014 budget – hits consumer confidence hard, as the chart below shows.

So yes, the CSSA has a good point about removing the temptation among politicians to slash the ‘cost’ of welfare, or to let inflation whittle it away over time.

An independent commission to set levels of payments would allow the concerns of the Business Council and others to be addressed and help voters that realise that welfare in not just a ‘cost’, but also an investment – to prevent under-class-style burdens on health, policing and social services and to produce the ‘return’ of a dignified worker, ready to work.