Two weeks after the Turnbull government rejected calls to lift Newstart Allowance, a new report has found people on the dole are now forced to live on an average of $17 a day.

The Salvation Army’s 2018 Economic and Social Impact Survey, released on Wednesday, found those who rely on the organisation’s services were facing devastating hardship, with more than half saying their financial situation had worsened over the past 12 months.

The report comes amid growing debate about the rate of the national unemployment benefit, which stands at $272.90 a week for a single person and has not risen in real terms since 1994.

“With increases in the cost of living, we see people going without medication, skipping meals and adequate winter heating because they are caught in the cycle of poverty,” Salvation Army’s Major Paul Moulds said.

Taking into account accommodation costs, the report also provides a more realistic picture of the lives of those living on Newstart compared to the $40-a-day figure that became the centre of debate before the federal budget.

Discussion about the payment flared in May following comments by Liberal MP Julia Banks, who believed she could live on $40 a day – the approximate rate of the payment.

Wednesday’s report found 95 per cent of those surveyed who accessed the Salvos’ services relied on welfare payments as their primary source of income. The same figure lived below the poverty line.

The average household income for those surveyed was $435 a week, the report found. The national median household income is $1438 a week.

Overall, after accounting for accommodation costs, people were left an average of $21 a day to pay for food, bills, transport and health care.

But for those surveyed who were on Newstart, the figure was $17 a day on average.

The Salvation Army’s findings mirror the story of Marie Usher, a 59-year-old Adelaide woman who told The New Daily in May she could only afford one meal a day while living on Newstart.

Aside from the survey, the Salvos’ report also drew from 16 interviews with people who accessed the charity’s emergency relief and case management services.

One person reported living in their car to save on rent, cooking their meals on a portable gas stove and showering in cold water.

About 80 per cent paid more than half their income towards housing, and nearly half had moved homes in the past 12 months.

“As long as my children are fed it doesn’t matter if I go without,” another welfare recipient said.

But for more than two in five families with children, a normal diet of three meals a day, including daily fresh fruit and vegetables and one meal that included protein such as meat or chicken was out of reach.

The report found 48 per cent of families with children did not have an internet connection, and more than half could not afford to pay for school activities, books and uniforms.

Major Moulds said it was “simply inhumane” the government was handing a tax cut to big business and the wealthy while “the most disadvantaged and marginalised people in this country continue to be ignored”.

It is widely acknowledged it will take a minimum increase of $75 a week just to ensure people can live on the poverty line – let alone above it.”

Before the budget, the Business Council of Australia, Ai-Group, Council of Small Business of Australia, ACTU and ACOSS all called for an increase to Newstart payments.

Separately, a report released last week found a 20 per cent increase in the number of people sleeping rough across the nation between 2011 and 2016. In Sydney, the more encompassing measure of homelessness rose 48 per cent over that period.

The New Daily surveyed all 150 lower house MPs earlier in the month about the rate of Newstart.

Though conceding Newstart is too low, Labor has not committed to an increase, saying it would first pursue a “root and branch” review of all welfare payments.

The Salvation Army released its report ahead of its annual Red Shield Appeal.