Morrison’s welfare claims look sillier by the day

By Leith van Onselen

Let’s recall Treasurer Scott Morrison’s speech last Thursday whereby he blamed younger Australians for the blow-out in welfare spending (and the Budget deficit):

“A generation has grown up not ever having known a recession, of seeing unemployment rates at more than ten percent, with one million Australians out of work or mortgage rates at 18 per cent or where inflation is actually a problem, rather than an aspiration.

In addition, a generation has grown up in an environment where receiving payments from the Government is not seen as the reserve of those who unfortunately will be forever dependent on support or in need of a hand up, but a common and expected component of their income over their entire life cycle.

On current settings, more Australians today are likely to go through their entire lives without ever paying tax than for generations. More Australians are also likely today to be net beneficiaries of the Government than contributors – never paying more tax than they receive in government payments.

There is a new divide – the taxed and the taxed nots…”

Upon hearing this argument last week, I immediately countered with data from last month’s HILDA survey, which revealed that welfare reliance for those below retirement age has actually fallen over the past decade:

I also showed that the biggest and fastest growing component of welfare spending is the Aged Pension ($45.7 billion currently rising by $2 billion per year to $52 billion by 2019-20), which dwarfs the other components (see below chart):

Now, Parliamentary Library research has been released showing that the proportion of the working-aged population claiming income support has declined from a peak of 25% in 1994 to 16.6%:

According to the report:

…reforms of the 1990s and 2006 saw a number of low workforce attachment payments, that is, payments which did not require recipients to be actively looking for work or studying, closed to new entrants. These included payment of the Age Pension to women under 65, and payments to partners, the mature aged and some classes of widows. The reforms, combined with a declining unemployment rate, saw a dramatic decline in receipt of income support for those aged 16 to 64 until 2008. As noted above, the GFC produced a slight reversal of this trend, but since 2010 the decline has continued, albeit slowly, despite rising unemployment. As at June 2015, 16.6% of the working age population was in receipt of income support, almost back to the 2008 level of 16.3%.

…the proportion receiving parenting payments has declined from a high of 5% in 1998 to 2.4% in 2015. This probably reflects changes to eligibility for these payments for those with school aged children.

However the most dramatic increase in income support reliance for the working age population has been among carers. The proportion of the working age population receiving Carer Payment has doubled since 2005, from 0.7% to 1.4%. Ageing of the population overall, with a consequential increase in the need for carers may be a factor in this increase…

Overall it would appear that previous reforms of the income support system, coupled with a stable unemployment rate, have been successful in reducing dependence on welfare for the working age population.

The Guardian’s Greg Jericho has also drawn on Natsem data to debunk Morrison’s claims about welfare:

The Natsem data shows the major reason for the decline in the number of net-taxpayers is the ageing population. While 53% of Australians are net-taxpayers, when you exclude those over 65 the figure rises to 67%:

Of course the overall rate of net-taxpayers is falling – since the start of the century the percentage of the Australian population over 65 has gone from 12.4% to 15%.

I look forward to Morrison suggesting we need to do something about those taxed-not pensioners.

In short, Treasurer Scott Morrison has picked the entirely wrong target in blaming younger Australians for the purported blow-out in welfare spending.

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