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

Overview of Presentation Aims of the report Data and limitations Some key findings: 1.The big picture 2.Some regional differences in total welfare payments 3.The distinction between Working Age Payments and the Age Pension 4.Spatial differences in Working Age Payments and the Age Pension 5.Some explanations Concluding remarks

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.

Main data source ABS Experimental Estimates of Personal Income for Small Areas (catalogue number ). Includes all types of individual income and five welfare payments Information is provided for Statistical Local Areas (SLAs) for the financial years to

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.

Some key findings Part 1: The big Picture

Compared to other OECD countries, Australia’s expenditure on its welfare state is relatively modest.

Welfare payments, as a proportion of GDP, have been at approximately the same level since OPEC oil crisis Recession GST Baby bonus

Part 2: Some Regional Differences Welfare payments are not evenly distributed by remoteness. Source: ABS Cat

Individual payments by remoteness 2001 Source: ABS Cat

Part 3: There is a basic distinction between payments to the working age population, and payments to the elderly.

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

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...

In fact, numerous studies show a relationship between disability support pension and negative labour market conditions – particularly for low skilled older males.

But, Australia’s 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.

Part 4: Spatial differences in different payments

Working Age Payments vs Age Pension 1996

Working Age Payments vs Age Pension 2001

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

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!

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.

BITRE’s report on Income Support will be released later this year.