Liberal MP Julia Banks claims she could live on the minimum $40-a-day Newstart ...

An affluent Liberal Party backbencher has been lambasted for claiming she could sustain herself on a $40-a-day government allowance.

Julia Banks, who holds the marginal Melbourne seat of Chisholm, stoked the ire of Australian welfare recipients when she told her ABC Local Radio station that existing Newstart and Youth Allowance payments were adequate for the the unemployed.

'I could live on 40 bucks a day knowing that the Government is supporting me with Newstart looking for employment,' she said. 

Liberal Party MP Julia Banks has faced a storm of criticism over comments she made regarding welfare payments in Australia

Liberal Party MP Julia Banks has faced a storm of criticism over comments she made regarding welfare payments in Australia

Her statement flew in the face of respected economist Chris Richardson's recent  assertion that the rate of unemployment benefits is 'unnecessarily cruel', and should be raised by $50 a week, ABC News reports.

Ms Banks said that such a suggestion amounted to 'socialism', and it was possible to live on $40 a day - prompting talkback listeners to accuse her of being 'insulting' and 'out of touch'. 

'I am certainly not,' she responded.

'I speak to constituents every day and all I can say is the dignity of having a job and finding work is what our policy is about.'

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