A more sustainable welfare system

The Government will undertake a major reform of the welfare system, bringing it into line with current labour market conditions and community attitudes.

A $3.6 billion package will improve incentives to work and increase labour force participation.

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A comprehensive $3.6 billion package to move people from welfare to work

Australia’s welfare system is out of date. The majority of the 2.6 million Australians of working age on income support are not required to look for work and, notwithstanding very low levels of unemployment, too many Australians are dependent on welfare payments.

A welfare system that focuses only on participation for those who can work full-time is no longer sustainable. Increased workforce participation will be required if we are to continue to improve our living standards as the population ages.

From 1 July 2006 a wider range of income support recipients will be obliged to seek work.


Single and partnered parents receiving Parenting Payment prior to 1 July 2006 will be able to remain on Parenting Payment under the current entitlement — that is, until their youngest child turns 16.

Whilst remaining on Parenting Payment until this time, this group of parents will have a year to seek work voluntarily from the later of 1 July 2006 or when their youngest child turns six. After that they will become subject to an obligation, based on their capacity, to seek part-time work of at least 15 hours per week.

Single and partnered parents applying for Parenting Payment on or after 1 July 2006 will receive Parenting Payment while their youngest child is less than six years old. When their youngest child turns six, these parents will receive enhanced Newstart and be subject to an obligation to seek part-time work of at least 15 hours per week.

Mature aged

New arrangements also apply to the mature aged. Newstart recipients aged between 50 and 64 will be obliged to seek full-time work in the same way as younger recipients. However, those over 55 will not be required to participate in work-for-the-dole, and can meet their obligations through volunteering.

Chart: Increasing numbers of income support recipients are not sustainable

Increasing numbers of income support recipients are not sustainable

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11 2005-06 Budget Overview