A leading economist says fixing the “unnecessarily cruel” dole system is a more important than budget repair.

Australia’s level of dole payments “is our standout failure as a nation”, Deloitte Access Economics senior partner Chris Richardson said in a National Press Club address this week.

“I'm a longstanding campaigner for budget repair, but I would rank it behind the need to lift unemployment benefits in Australia.”

Newstart and Youth Allowance and other unemployment benefits are failing to keep pace with rises in the minimum wage and the cost of living.

“That combination says we here in Australia don't have a dole-bludger problem — what we have is a society that is unnecessarily cruel,” Mr Richardson said.

Around 1 million people on Newstart and Youth Allowance live on about $40 per day.

“We make trouble for ourselves if we let the poorest of the poor get poorer,” Mr Richardson said.

He called for a $50-per-week raise in unemployment benefits, which would cost the budget about $3 billion per year.

“That's a lot of money, but it's a lot of money because we have to catch up to the wrongs of the past,” he said.

Deloitte issued its latest Budget Monitor this week.