The minister who said she'd be able to live on the dole has now apologised, admitting her remarks were insensitive.
Amid growing calls for unemployment benefit Newstart to be boosted, Community Services Minister Jenny Macklin was asked at a New Year's Day press conference if she could survive on $35 a day.
She responded: "I could".
This caused outrage among advocacy groups, particularly in the context of government changes to the parenting payment scheme that will shift some 84,000 single parents to the Newstart allowance when their youngest child turns eight.
Welfare groups estimate some families will be between $60 and $100 a week worse off.
On Friday, almost two weeks after her comments, Ms Macklin said she understood people were angry.
"I do acknowledge that my remarks were insensitive and I'm certainly very sorry for that," she told reporters in Sydney.
"I do understand that it is very hard to live on a very low income including unemployment benefits."
Ms Macklin said she could have been clearer in the way she expressed herself.
Former prime minister Kevin Rudd on Friday said the ditching of the budget surplus goal gave the government an opportunity to do more for the poor.
"I'm just saying we are the Labor Party, we are a Labor government, we have got responsibility for people who are doing it tough and people who need a bit of a hand up, and therefore we could be doing more," Mr Rudd said.
"I've also noted carefully what the treasurer has said about the non-deliverability of the budget surplus."
That decision provided a greater opportunity to attend to some pretty basic social needs, he said.
"I think people need to show a bit more of a heart."
Mr Rudd said he had no specific proposal for change as that was the responsibility of government ministers.
"The truth is, if you put yourself in the position of people who have to make ends meet on Newstart, this is very, very hard," he said.
Mr Rudd said he had not spoken about the matter to caucus members "for some weeks".
Other Labor backbenchers, along with the Greens, have called for a $50-a-week increase to the dole and the reversal of the parenting payment changes.
Prime Minister Julia Gillard said a job was the best form of relief for those people on unemployment benefits.
"I understand it is very tough for people on low and fixed incomes to make ends meet," she told reporters in Sydney on Friday.
"We keep our focus on creating jobs because the best thing we can do for anybody experiencing unemployment is to make sure there is a job available for them."