The truth about ‘bludgers’: welfare dependency in Australia is falling


The latest figures on welfare recipients reveal that contrary to the scare campaigns, the level of people in Australia on welfare has fallen dramatically over the past decade, and that rather than those on disability pensions, the big increase is those going onto the aged pension.

The Abbott government has never been a fan of welfare. Last year, the then minister for social services, Kevin Andrews declared if nothing was done then in “10 or 15 years time” Australia would be “in the situation that some of the countries in Europe are in”.

This year, upon being appointed Andrews’ replacement, Scott Morrison announced that he would “stop the bludgers”.

So no doubt the new minister would welcome the latest welfare data released by the department of social services last week which showed that excluding Newstart the proportion of the population on welfare fell in 2013.

Truth is often a casualty in the war on welfare. Take for example when Scott Morrison was interviewed by Alan Jones last month. Morrison told Jones and his listeners that “Over 100,000 extra people went on the DSP under the Labor government – over 100,000. Now that is not sustainable.”

To this Jones replied that it meant “self-reliance is a distant memory, isn’t it?… Where do we say to people –you need to be self-reliant, we need to be independent, not dependent. We’ve lost that fight”.

Luckily Jones can relax – the fight actually has been won. In 2002, 31.4% of the working-age population was on some form of welfare compared to just 27.5% now. We are much more independent now than before:

But a big issue with welfare is having enough workers relative to those on welfare. If the number of workers per person on welfare drops in effect it means each worker is having to contribute more individually through their tax to pay for the welfare.

Here the news is good as well:

Other than a spike in 2009 due to the sharp rise in Newstart payments, the level of people in the labour force per person on welfare has stayed flat since 2007, and is well above the ratio observed in 2002.

And rather than bludgers, the big issue of welfare is aged pensioners. They account for by far the biggest numbers on welfare. In 2013, 2.36m people were on the aged pension – 45% of all welfare recipients.

If we exclude those on the aged pension the decline in dependence over the past decade is even more stark. And if we also exclude those on Newstart – which is linked to unemployment rather than any sense of structural dependence, the picture is one where there are 4% fewer people on welfare than was the case in 2007:

It demonstrates that much of the media focus on welfare bludgers is complete bollocks.

Take the disability support pension numbers. Scott Morrison’s figure that over 100,000 more people went on DSP under the ALP government is true – from June 2007 to June 2013 107,582 more people went on DSP – an increase of 15.1%.

But what that figure ignores is that there was a significant increase in DSP numbers during the GFC. It seems clear that people were abusing the system, as the growth of DSP recipients which had been falling for 15 years suddenly shot up:

As a result, the Gillard government in 2011 instigated a number of changes to the eligibility criteria for DSP. They clearly had an impact. In 2012 the number of DSP recipients grew by just 1% and in 2013 they fell for the first time in the 21 years which the DSS records cover.

And while from 2007 to 2013 the numbers of DSP recipients grew by 15.1%, in that same time the working age population increased by 12.4%.

That means that in 2007, 4.3% of the working-age population was on DSP; in 2013 it was up to 4.4% – the same level as 10 years ago, and hardly an amount to get worried about, or to even suggest there needs to be a crack-down:

One issue with DSP is that the percentage of those over 60 on the payments is rising. In 2002 just 19.4% of those on DSP were over 60 years of age – now it is up to 24.8%.

The ageing of the population obviously affects most the aged pensioner numbers – a factor that was given a boost in the past five years when the first baby boomers hit the retirement age:

From 2002 when 11.75% of the working-age population was on the aged pension, we now have 12.6%. In that time we have also seen the number of people in the labour force for every person on the aged pension drop from 5.4 to 5.2.

Given in the past six years the number of aged pensioners has increased by more than twice as many as the rest of all other welfare payments combined, the concern of the welfare system is really the concern of the aged pension – everything else is fiddling at the edges, or being mean for the sake of looking “tough on bludgers”.

And when it comes to being mean, those on the single parenting payment are the best recent example of a group treated in such a manner for no good reason.

The numbers of people on the single parenting payment in the early 2000s grew each year by around 2.5%, and from 2002-2005 the proportion of the working-age population on the payment was flat at around 2.8%.

There was no real issue to deal with.

And yet, in 2006 the Howard government changed the eligibility criteria – limiting it to parents of children under eight rather than 16.

It was a petty decision which saved the government money because these parents (95% of whom are women) were then forced onto Newstart which is a lower payment.

This, not surprisingly, caused the numbers to fall – by 8% in both 2007 and 2008. The rules however were grandfathered for those who were on the payment.

But in 2013, in one of its meanest decisions, the Gillard government removed this grandfather status – sending around 68,000 parents immediately off the payment.

In 2013, the number of single parenting allowance recipients fell by 20%. These women weren’t bludging; they were just single parents getting by on a maximum of $720 a fortnight.

And unlike the aged pensioners, they didn’t have any political force and thus were easy picking.

The level of people on welfare has declined over the course of the past decade, and to an extent that is worth cheering.

We should hope people move from welfare to work. But cutting welfare purely for ideological reasons about leaners and lifters, or because you need to find cuts to meet some bogus timeframe for retuning the budget to surplus is not something to applaud.

Truth of welfare numbers might be the first casualty in the war of welfare, but as a consequence, a close second are the poorest in our society.

via The truth about ‘bludgers’: welfare dependency in Australia is falling | Business | The Guardian.

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