Salvation Army general manager Jennifer Kirkaldy told a parliamentary inquiry examining the extent of poverty in Australia that failures in the welfare and housing systems were leading people to live in hardship.
The average person the charity worked with had just $39 a week left after necessities such as housing, transport, groceries and utilities were covered.
"The extent and nature of poverty in Australia, as the Salvation Army sees it every day, is that it is very real, it is widespread, and it is devastating," Ms Kirkaldy said.
She said any rise in welfare payments was being swallowed up by soaring inflation and cost of living pressures.
Ms Kirkaldy said Australia lacked effective data on how much poverty was costing the economy every year.
She said buy now, pay later services and access to safe credit were important, but were increasingly used to pay for necessities.
Lifeline Australia chief research officer Dr Anna Brooks said the suicide prevention support service was experiencing an increase in people reaching out due to financial distress at levels "not seen before".
She said an increase in welfare payments helped, but if it wasn't a substantial change, it wouldn't change the distress people were feeling.
Brotherhood of St Laurence chief executive Dr Travers McLeod said the "natural next step" was to have legislated measures on poverty reduction and economic inclusion.
"We have a choice about how ambitious Australia wants to be," he said.
"How ambitious people in this place (Parliament House) want to be in preventing and eliminating poverty in this country."
Dr McLeod said introducing legislated measures and adequate social security payments must sit alongside other structural approaches to reduce poverty, including job security and significant investment in social housing.
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