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Is Australia’s welfare system unsustainable?

12 Feb 2014
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Figures from the past two decades challenge the view that the welfare budget is out of control and help us understand the likely impact of future policy changes.

ACCORDING to social services minister Kevin Andrews, the latest figures from his department show that one-in-five Australians received some form of government income support in 2012, at a cost of over $70 billion. The minister described the level of welfare as “unsustainable and relentless” and said that more must be done to reduce the burden on the federal budget. He highlighted two areas for attention – the disability support pension, or DSP, and Newstart, the payment for the unemployed – and announced that the review of the welfare system will now report at the end of February.

The number of people receiving those two payments certainly seems to have grown significantly over the past five years: from 714,000 in 2007 to 827,000 in 2012 in the case of the DSP, and from 486,000 to 634,000 for Newstart and unemployed recipients of the youth allowance. Even more strikingly, recent labour-force figures show another large jump in the number of people receiving unemployment payments to just over 800,000 in mid 2013.

What explains these trends? Are they likely to continue “relentlessly” and do they mean that the system has become “unsustainable”?

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2014
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