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A sustainable welfare system for the future

Most working age welfare recipients are not required to seek work. This is not sustainable, particularly given the ageing population. Increased participation in work from all Australians capable of work, including welfare recipients, increases individual wellbeing and is needed to help improve our future standard of living.

Furthering welfare reform

This Budget introduces a comprehensive reform of the welfare system for working age Australians. In doing so, it tackles the twin goals of lifting workforce participation and reducing welfare dependency, while maintaining a strong safety net for those who need it.

The changes build on those announced in Australians Working Together — and will ensure the sustainability of the welfare system into the future.

Need for increased participation

The Intergenerational Report highlighted the need for higher workforce participation to maintain Australia’s high living standards, as the proportion of the working age population decreases over time.

Only 15 per cent of the 2.6 million working age Australians currently on income support are required to actively search for a job at a particular point in time. This reflects an outdated presumption in the welfare system that only those who can work full time must seek work.

Welfare reform plays a role in increasing participation by ensuring that people who can work do so. This is an important part of a broader response to demographic change.

Change in working age income support recipients for specific payment groups, 1970 – 2004 - Newstart Allowance

Change in working age income support recipients for specific payment groups, 1970 – 2004 - Parenting Payment and Disability Support Pension

Change in working age income support recipients for specific payment groups, 1970 – 2004

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1 2005-06 Budget