One of the nation’s largest employer groups has argued against an increase in Newstart Allowance, putting it starkly at odds with the other major business lobbies which say the payment is a barrier to employment.

Australian Chamber of Commerce and Industry (ACCI) chief executive James Pearson confirmed to The New Daily on Thursday that he would not support an increase.

“Increasing the Newstart allowance to the extent that it would make a material difference would be a significant cost to the budget,” Mr Pearson said.

“Our argument is that kind of expenditure would more useful to spend on programs that are already proving to be successful in getting people who are long term unemployed into jobs.”

Mr Pearson’s comments put ACCI in a starkly different position to other major employer groups, such as the Business Group of Australia, Ai-Group and COSBOA, as well as the ACTU and ACOSS.

The clarification of ACCI’s position came on the same day the Senate rejected a Greens push to increase the payment by $75 a week.

The push in the Senate was voted down after Labor, One Nation, Derryn Hinch, Cory Bernardi, David Leyonhjelm voted with the Coalition to oppose the motion, which urged the government to increase Newstart and Youth Allowance.

Labor Senator Anthony Chisholm accused the Greens of a “stunt”, saying the opposition was committed to a “proper policy process”.

He said Labor had proposed a review into Newstart, which was “too low”.

“We fully understand that Newstart hasn’t seen an increase in real terms in 20 years,” Senator Chisholm said.

But Greens leader Richard Di Natale hit back, arguing it “won’t be long until the Labor Party do come on board the campaign to raise Newstart”.

“The last time I heard a Labor senator use the word stunt in referring to a Greens proposal was in relation to the royal commission,” he said.

“It was Senator Sam Dastyari, who in justifying a vote against a royal commission said he wouldn’t support it because it was a Greens stunt.”

On Wednesday, former Prime Minister John Howard backed calls to raise the payment in real terms.

“I actually think there is an argument about that, I do,” Mr Howard said on Wednesday.

I was in favour of freezing that when it happened, but I think the freeze has probably gone on too long.”

Mr Pearson cited Treasurer Scott Morrison’s comments on Wednesday that almost all Newstart recipients were also accessing some other form of assistance.

“The important thing to remember is Newstart isn’t a pension, it’s to provide some help for people who are looking for work,” he said.

But Newstart recipients have told The New Daily that, even with rent assistance, when bills and other costs are considered, those on the dole only have about $20 a day to cover food and the transport costs required to meet their “mutual obligations”.

Liberal MP Julia Banks sparked outrage last week by saying she believed she could live on $40 a day, which is about the rate of Newstart payments.

Calls to increase the payment mounted ahead of the budget following a proposal from prominent Deloitte economist Chris Richardson to raise the payment by $50 a week.

Labor was wedged by the Senate vote on Thursday, with Opposition Leader Bill Shorten having said the payment was “too low” yet stopping short of promising an increase.

South Australian Senator Tim Storer and the two Centre Alliance senators backed the Greens’ proposal.

The pension was raised under the previous Labor government, but the rate of Newstart – currently $544.80 for a single person – has not seen an increase in real terms since 1994.

The payment, which rises with inflation, was increased by 50 cents in March.

Defending his decision not to raise Newstart in the budget, Treasurer Scott Morrison said on Wednesday that “99 per cent of those who are on Newstart are also on other forms of benefits”.

A similar Greens push failed in February after the government and Labor voted against it.