What counts as welfare spending?

21 Dec 2015

Debates over the federal budget often refer to the level of ‘welfare’ spending. However the term welfare is often poorly defined and can lead to confusion.

Debates over the federal budget often refer to the level of ‘welfare’ spending. However the term welfare is often poorly defined. This can lead to confusion.

The ambiguity of the term ‘welfare’ is a problem across English-speaking countries. For example, in a post on the House of Commons Library Blog, Rod McInnes writes:

"The word ‘welfare’ does not have a single universally accepted definition in the context of public expenditure. For some people, the word is associated with cash handouts for working-age people who are workless or on low incomes. Others define the term more broadly to encompass other strands of benefit expenditure, or even services provided as benefits-in-kind by the ‘welfare state’, such as the NHS [National Health Service], social care or free school meals. The word ‘welfare’ may also be felt by some to carry a certain stigma, whereas others may consider it neutral rather than pejorative."

At its broadest welfare can be used to refer to all of the programs and services that make up the welfare state. This can include health and education, as well as income support payments such as the Age Pension, Carer Payment, Disability Support Pension and Newstart Allowance.

Welfare can also refer to the administrative category of ‘social security and welfare’. This category is used in budget papers and includes spending on aged care, child care, the National Disability Insurance Scheme (NDIS), family assistance payments and income support payments.

Welfare can also refer to a much narrower (and less clearly defined) category of spending on income support payments to people of working age. These welfare payments are means-tested benefits provided in cash. They go to people of working age who are not participating in paid employment or other activities such as education or vocational training. The term welfare can be applied loosely to spending that meets some or all of these criteria. It is a moral or political category rather than a legal or administrative one. It is often associated with the idea that recipients have not earned an entitlement to payments through contributions to the community.

Use of this political category of welfare has become increasingly common in Australian political debate. The category tends to include unemployment payments, such as Newstart Allowance, and payments to people of working age claiming support on the grounds of disability or single parenthood

Statistics on welfare spending play a central role in debates over government policy. However, in public debate it is not always clear which category these statistics refer to. Sometimes statistics that refer to the broad category of social security and welfare are presented as if they referred to the narrower political category of welfare.

If public debate is to be informed by facts, commentators need to pay close attention to the way categories such as welfare are defined. When categories remain vague and ambiguous, the statistics can conceal as much as they reveal.


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