Andrews' Phantom Welfare Spending Crisis

Advance Summary

1. An "unsustainable" level of welfare spending has been asserted by Human Services Minister, Kevin Andrews, in flagging a review of the system.

2. However, the number of people on welfare has not increased over the past decade when it is measured on a per capita basis rather than in raw-number terms.

3. Furthermore, when the age pension is excluded the proportion of people receiving welfare payments was consistently lower under Labor than in most of the second half of the Howard Coalition government.

4. Recent increases in the number of people receiving Newstart are explained largely by classification changes through the forcing of parents off parenting benefits, and increased unemployment.

5. While it would be more productive to investigate other areas of the welfare system, unemployment and disability benefits are a more politically convenient target.

6. Any investigation of whether "perverse incentives" are encouraging potential jobseekers to apply for disability support instead should consider whether the conditions under which Newstart allowance is made available, rather than just the disparity in payment amounts, might contribute to the problem (if it even exists.)