Wealthy fare well from welfare

by | Jan 2, 2016 | Australia, income, social security, tax

In 2013-14, the Australian Government dispersed a Robin Hoodesque $105 billion across the community through income support payments. That’s roughly 30% of its tax revenue. Unlike Robin, however, Kevin, Julia, Tony and their merry men gave much of their loot to the most fortunate, rather than to the poor.

Based on research conducted by the Australian Productivity Commission[1], the wealthiest half of households received just as much income support as the poorest half.  And whilst the poorest decile (10%) received the most support, those in middle upper wealth households (50th to 80th percentile) received the lion’s share.

The distribution of government support to wealthy households is largely driven by Aged and Family pensions, whilst Unemployment, Study and Disability payments go some way to balancing out the situation.

Newstart allowance (a.k.a. the dole) and Study Support programs are tightly targeted based on income and wealth of the recipient. Disability payments are also largely provided to less wealthy households. This leads to claims that the Australian Welfare system is one of the most targeted in the world.

Income Support - Dole and Study

However these two payments only make up 7% of all income support provided by the government.

The majority of the loot is given away in the form of Aged Pensions (44%) and Family Payments (26%).

Income support by payment

Unlike the dole, Aged Pensions and Family Payments are much looser in their targeting.  As a result, more of these benefits are paid to the top wealth brackets than to the poorer households.

Income Support - Pensions

Unfortunately, this appear to create an entirely misguided system in which the wealthiest households in Australia receive more welfare than those with limited resources, to the extent that the amount paid in Aged Pensions to the top 20% of households is $1.2 billion more than the entire unemployment benefits.


This is not to suggest that pension need cutting, nor that the Australian welfare system is over-inflated.

Rather that we’re failing to funnel funds to support those in the greatest need.


[1] Productivity Commission – Tax and Transfer Research

[2] Image credit: hktang – Flickr – / CC BY – Modified