Insights From Australia’s Annual Welfare Snapshot

An annual snapshot of Australia’s welfare landscape shows its cost to the nation is relatively stable, the number of people on welfare is in decline and while there is an increase in the carers and aged pension cohort it is less than previously expected.

The Department of Social Services 2017 Valuation Report was released on Saturday.

It’s headline results were that the total lifetime cost – the net present value of all future welfare payments to the in-scope population – was $4,681 billion as at 30 June 2017, up 3.7 per cent ($167 billion) from $4,514 billion last year.

The change was due to the combined effect of population growth and inflation which increased the total lifetime cost by $210 billion (+4.7 per cent).

Other changes included a reduction in the number of people accessing welfare payments which have contributed a decrease of $43 billion (-1.0 per cent).

The Carers class and Age Pension class both have continued to grow, but to a lesser extent than previously expected, the report said.

While the population had grown over the year the total number of people in the welfare system was very close to that last year.

Over the past year, entries to the welfare system decreased and exits from the system increased compared to recent years.

The numbers of people in most income support classes, including the Studying, Working Age, Parenting and Disability Support Pensioners classes, have reduced compared to last year.

The exceptions to this were the Carers class and Age Pension class, both of which have continued to grow, but to a lesser extent than previously expected.

The average lifetime cost has remained fairly stable after allowing for inflation, both across the whole population and for most of the main classes.

A slightly bigger change has been seen for the Working Age class, where reducing numbers and changes to other payments has shifted the profile of people in the class and resulted in an increased average size.

The net impact of adjustments for policy changes has contributed to a 0.1 per cent decrease ($4 billion) in the total lifetime cost.

A substantial increase due to the introduction of the Child Care Subsidy and associated changes was more than offset by the introduction of the $80,000 income limit for claiming the Family Tax Benefit Part A supplement and the two-year freeze on FTB rates.

Minister for Social Services Dan Tehan said the data revealed a reduction in the number of people accessing welfare payments had led to a $43 billion decrease in Australia’s total future lifetime welfare cost.

“After record jobs growth, the proportion of working age Australians now dependent on welfare had fallen to 15.1 per cent – the lowest level in more than 25 years,” Tehan said.

ACOSS senior policy and advocacy officer Charmaine Crowe said the report told us nothing new.

“When unemployment decreases so does the uptake of a Working Age like Newstart,” Crowe said.

“We’ve seen the number of people on Newstart increase since the start of the [2008] financial crisis and now it appears there could be a slight reduction in the number of people on that payment.

“But at the same time government is putting in place many policies that are driving people on to Newstart, including tightening access to the disability support pension.

“The number of people with a disability on Newstart is increasing year-on-year and they are going to find it increasingly difficult to find paid work in a difficult job market – there’s only one job available for every eight people looking – but they also have pretty serious health and disability issues that make it more difficult to get into paid work.”