Australia’s welfare blow-out debunked

For several years, media outlets like The Australian ran a campaign against the so-called ‘blowout’ in welfare spending, backing claims made by the Coalition Government that nearly half of the population receives more in welfare than they pay in tax.

The Australian Institute of Health and Welfare (AIHW) 2019 welfare report has debunked this myth, stating that the nation’s welfare bill has levelled at $130 billion over the past three years. The report also states the proportion of working-age Australians receiving income support declined from 22% in 1999 to 15% in 2018:

Income support payments assist people with the everyday costs of living. Unemployment payments provide assistance to those who cannot find work. Parenting payments are paid in recognition of the impact caring for a young child can have on a parent’s capacity to work.

At 29 June 2018, about 7% or 1.1 million people aged 18–64 were receiving unemployment or parenting payments, down from 13% or 1.3 million people in 2001.

The proportion of people aged 18–64 receiving unemployment payments has remained relatively stable over the past 2 decades, while the proportion receiving parenting payments has fallen…

Between 2001 and 2018, the proportion of older people receiving income support has remained relatively stable. However, an ageing and growing population means the number of older people receiving income support rose from 1.6 million to 2.6 million—a 60% increase.

The 2019 Household Income and Labour Dynamics in Australia (HILDA) survey also demolished this myth, showing that welfare reliance for those at working age has actually fallen materially over the past 16 years:

Reliance on welfare remains a significant concern for policymakers in Australia…

Figures 3.8 and 3.9 respectively present cross-sectional estimates of welfare receipt and welfare reliance for ‘working-age’ people, defined here as people aged 18 to 64. In 2017, 30.6% of individuals aged 18 to 64 were living in a household that received income support at some stage of the financial year ending 30 June 2017. This is substantially lower than at the beginning of the HILDA Survey in 2001, when the corresponding figure was 38.5%…

Whereas welfare reliance among over-65s has also fallen:

Another myth busted.

Unconventional Economist

Leith van Onselen is Chief Economist at the MB Fund and MB Super. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.

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