Income support

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Income support

• The geographic distribution of welfare payments
  in Australia
• Speaker Carolyn Brennan
• Authors Carolyn Brennan, Helen Swan, Dennis
  Byles.

2
Overview of Presentation

• Aims of the report
• Data and limitations
• Some key findings
• The big picture
• Some regional differences in total welfare
  payments
• The distinction between Working Age Payments and
  the Age Pension
• Spatial differences in Working Age Payments and
  the Age Pension
• Some explanations
• Concluding remarks

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Aims of the report

• To show the distribution and trends in five major
  welfare payments, comparing states and
  territories, remoteness classes and statistical
  local areas (SLAs).
• To compare our results with other literature in
  this field.
• To explore the relationship between income
  support and economic growth at a regional level.

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Main data source

• ABS Experimental Estimates of Personal Income
  for Small Areas (catalogue number 6524.0.55.001).
• Includes all types of individual income and five
  welfare payments
• Information is provided for Statistical Local
  Areas (SLAs) for the financial years 1995-96 to
  2000-01.

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Data limitations

• Data set does not include Veterans pensions or
  Community Development Employment Project (CDEP)
  payments.
• The population size of Statistical Local Areas
  varies.
• Age of the data set.

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Some key findings

• Part 1 The big Picture

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Compared to other OECD countries, Australias
expenditure on its welfare state is relatively
modest.
8

Welfare payments, as a proportion of GDP, have
been at approximately the same level since 1993.
OPEC oil crisis
GST
Recession
Recession
Baby bonus
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Part 2 Some Regional Differences

• Welfare payments are not evenly distributed by
  remoteness.

• Source ABS Cat. 6524.0.55.001

Source ABS Cat. 6524.0.55.001
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Individual payments by remoteness 2001
Source ABS Cat. 6524.0.55.001
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Part 3 There is a basic distinction between
payments to the working age population, and
payments to the elderly.
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Age Pension vs Working Age Payments

• AGE PENSION
• Recipients have retired, so no expectation that
  they will become economically active again
• Contrary to media hype, there is no Ageing
  Tsunami
• Although the population is ageing, so is the
  wealth of retirees
• Lower levels of disadvantage

• WORKING AGE PAYMENTS
• Includes Disability Support Pension Parenting
  Payment Newstart Allowance and Youth Allowance.
• Recipients are working age, and receipt is often
  temporary.
• Associated with higher levels of disadvantage

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Issues and Trends

• AGE PENSION
• Increasing numbers of the elderly potentially
  means greater health expenditure

• WORKING AGE PAYMENTS
• Newstart has been declining, along with
  unemployment
• Family and child benefits have increased a lot
  over time however, parenting payment appears
  reasonably stable
• But, recipients of the disability support pension
  have been increasing faster than the disability
  rate...

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In fact, numerous studies show a relationship
between disability support pension and negative
labour market conditions particularly for low
skilled older males.
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But, Australias been having a boom why is the
rate increasing?

• The bulk of jobs growth has been for skilled
  workers.
• Bob Gregory argues low skilled work, particularly
  for older males, has not experienced growth in
  the new economy.
• A recent trend is the increasing numbers of women
  joining the DSP.

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Part 4 Spatial differences in different payments
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Working Age Payments vs Age Pension 1996
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Working Age Payments vs Age Pension 2001
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Part 5 So much for egalitarianism why are
there such big regional differences?

• Explanation 1 Regional economic differences.
  Changes to industry create winners and losers.
• Explanation 2 Migration of the skilled and
  talented to metropolitan areas.
• Explanation 3 Welfare-led migration. Retirement
  and lifestyle, especially for low incomes.
• Explanation 4 Residential planning and
  neighbourhood effects

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But before you thought the solution was simple

• Even though there is some evidence that working
  age payments, in particular, DSP and unemployment
  payments, increase when economic times get tough,
  the reverse is NOT true.
• So, boosting regional economic growth will not
  necessarily reduce welfare in those areas.
  Instead, the jobs may go to outsiders!

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Concluding remarks

• Welfare payments in Australia are moderate by
  OECD standards.
• Australia is better equipped to handle its ageing
  population than many other nations.
• Australia does have an issue with disability
  support pension.
• There are stark geographic differences in welfare
  dependency.
• As long as payments are not fixed geographically,
  some people will move to places which are more
  affordable and offer better lifestyles - and why
  not?
• Policymakers need to take account of this in
  planning services for the future.

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BITREs report on Income Support will be released
later this year.