Australian Institute of Health and Welfare (2021) Welfare expenditure., AIHW, Australian Government, accessed 29 January 2022
Australian Institute of Health and Welfare. (2021). Welfare expenditure. Retrieved from https://www.aihw.gov.au/reports/australias-welfare/welfare-expenditure
Welfare expenditure. Australian Institute of Health and Welfare, 16 September 2021, https://www.aihw.gov.au/reports/australias-welfare/welfare-expenditure
Australian Institute of Health and Welfare. Welfare expenditure [Internet]. Canberra: Australian Institute of Health and Welfare, 2021 [cited 2022 Jan. 29]. Available from: https://www.aihw.gov.au/reports/australias-welfare/welfare-expenditure
Australian Institute of Health and Welfare (AIHW) 2021, Welfare expenditure, viewed 29 January 2022, https://www.aihw.gov.au/reports/australias-welfare/welfare-expenditure
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Welfare spending generally aims to improve the social and economic wellbeing of the population. It is distinct from health spending in that it focuses on measures such as income support and social and economic employment-related programs and services (for example, unemployment relief and family and relationships services).
See the Australian Institute of Health and Welfare’s Health expenditure Australia series for more information on health spending.
Both the Australian Government and the state and territory governments contribute to welfare spending, as do non-government organisations and individuals. The Australian Government primarily contributes through cash payments relating to its areas of responsibility, as defined in the Australian Constitution (which include family allowances, unemployment benefits and pensions); it also contributes to certain welfare services. The states and territories focus more on providing welfare services.
Data on welfare spending that is funded by non-government sources (for example, where a welfare service is funded by donations or fees rather than through government funding) are not readily available in Australia and are not included here.
See Philanthropy and charitable giving for some information on non-government donations.
In 2019–20, government spending on welfare services and payments was $195.7 billion. The Australian Government funded the majority of this amount (88% or $171.5 billion), with the remaining 12% funded by state and territory governments.
Where possible, welfare spending estimates have been developed for consistency with the Australian Health and Welfare’s Welfare Expenditure Australia series of publications. This ensures trend data are consistent.
Constant prices and ‘real terms’
Spending is reported in constant prices (that is, adjusted for inflation) except where noted. The use of constant price estimates indicates what the equivalent spending would have been had 2019–20 prices applied in all years, as it removes the inflation effect. The phrase ‘real terms’ is also used to describe spending in constant prices. On this page:
Comparability with other welfare spending estimates
To maintain historical comparability, the Youth Allowance (Students and Other), Austudy and the Aboriginal and Torres Strait Islander Study Assistance Scheme (ABSTUDY) are not included in the welfare spending estimates presented on this page. Therefore, these estimates are not comparable with figures reported elsewhere (such as in the Treasury Final Budget Outcome).
State and territory welfare expenditure
The most recent welfare expenditure data available for state and territory governments are for the 2015–16 financial year, as published in the 2017 Indigenous expenditure report (Productivity Commission 2017), which includes data for both indigenous and non-Indigenous welfare service expenditure. State and territory data were estimated for 2016–17 to 2019–20 using available trend data from the Indigenous expenditure report and from Government finance statistics (GFS) 2019–20, in which the Classification of the Functions of Government – Australia (COFOG-A) was used (ABS 2015, 2021b). In previous reports, the GFS was based on the older Government Purpose Classification (ABS 2005).
Hence, the estimated time series data on this page are not fully comparable with data published previously. Any additional spending on welfare services by the states and territories related to either the 2019–20 bushfires or the coronavirus 2019 (COVID-19) are also not visible in these data.
Sources of data
Data are sourced from the welfare expenditure dataset of the Australian Institute of Health and Welfare, which is, in turn, sourced from publicly available data from:
Data for 2018–19 and 2019–20 are extracted from the corresponding reports of these organisations (ABS 2021b; Department of Education, Skills and Employment 2020, 2021; Department of Health 2020, 2021; Department of the Treasury 2021; Department of Social Services 2020b, 2021b; Department of Veterans’ Affairs 2020, 2021; NDIS 2021; PM&C 2020, 2021; Productivity Commission 2021).
In 2019–20, the Australian and state and territory governments spent $195.7 billion on welfare. In real terms (that is, adjusted for inflation), this represented a 12% growth in spending from 2018–19 – an additional $21.5 billion. This real growth was much higher than the average growth over the period from 2001–02 to 2019–20 (3.5% per annum) (Figure 1). The main driver of this high growth rate in 2019–20 was the economic measures the Australian Government implemented from March 2020 in response to the coronavirus 2019 (COVID-19) pandemic.
See COVID-19 economic response measures.
Before 2019–20, and before these COVID-19 measures, welfare spending in Australia had generally grown at a similar pace to population growth, with real spending fluctuating at around $6,985 per person since 2014–15. In 2019–20, real spending increased by around 11% to $7,668 per person.
This welfare spending relates to spending across the entire population and not spending per eligible person in particular programs or spending per benefit recipient. This more detailed analysis is not included on this page.
This line chart shows that total government welfare expenditure increased steadily from $106.3 billion in 2000–01 to $195.7 billion in 2019–20. Per person government welfare expenditure increased from $5,481 in 2000–01 to $7.668 in 2019–20. Both total government welfare expenditure and per person government welfare expenditure rose sharply during the Global Financial Crisis (GFC) in 2008–09.
The economic measures mentioned on this page are those which can be related to welfare expenditure data up to the year 2019–20. See Department of Treasury for more information on the COVID-19 government response.
From 27 April 2020, eligible income support recipients of these payments – including the JobSeeker Payment, Parenting Payment, Partner Allowance, Widow Allowance and Special Benefit – received the supplement of $550 per fortnight. This rate was valid until 24 September 2020.
The Government made several temporary changes to the JobSeeker Payment which increased the number of recipients. These changes included:
First economic support payment
On 31 March 2020, the Government provided a one-off economic support payment of $750 to recipients of social security and veteran payments and family tax benefits, as well as to holders of a pensioner concession card or a Commonwealth senior health card.
As a proportion of overall economic activity, government welfare spending had been reducing in the years leading up to 2019–20, declining from 9.5% of gross domestic product (GDP) in 2015–16 to 8.8% in 2018–19. In 2019–20, it grew to 9.9% of GDP. The only time it has been higher in the past 2 decades was after the Global Financial Crisis (GFC), when it reached 10% (in 2008–09) (Figure 2).
The ratio of government welfare spending to tax revenue had also generally been declining before the COVID-19 pandemic. It fell from 35% in 2014–15 to 31% in 2018–19, suggesting that a smaller proportion of tax revenue was being spent by governments on welfare payments and services each year before the pandemic.
In 2019–20, the ratio increased to 36% but remained below the peak it reached following the GFC in 2008–09 (39%).
This line graph shows ratios of welfare expenditure to tax revenue and GDP for the period 2001–02 to 2019–20. The average ratio of welfare expenditure to tax revenue was 33 percent over the period but peaked during the GFC in 2008–09. Similarly, the government welfare expenditure to GDP ratio was stable though it rose sharply to 10.3% in 2008–09.
Total welfare spending in 2019–20 comprised $128.9 billion (66%) in cash payments, $64.0 billion (33%) in welfare services and $2.8 billion (1.5%) in departmental administration costs.
The total amount spent, in real terms, by governments on cash payments had declined in the years before 2019–20, from $120.7 billion in 2015–16 to $114.3 billion in 2018–19, but it increased sharply, by 13% in 2019–20 (Figure 3). This marked increase was attributed to the Australian Government’s implementing several cash payment measures as part of its response to the COVID-19 pandemic (as mentioned earlier). These measures targeted selected groups of income support recipients, especially unemployed people, for whom the introduction of the JobSeeker Payment played a major role (DSS 2020a).
See JobSeeker and employment services.
The cash payments mentioned on this page are those provided by the Australian Government to assist older people, people with disability, people who provide care for others, families with children, war veterans and their families, and people who are unemployed.
The estimates of cash payments present expenditure by the Australian Government, including the Age Pension, Family Tax Benefit, Disability Support Pension and Carer Allowance/Payment, Newstart Allowance and the JobSeeker Payment. The JobKeeper payment is not included in the estimates as it is a wage subsidy for businesses rather than a welfare payment for individuals and households.
To maintain comparability over time, the Child Care Benefit and Child Care Rebate are included in the estimates of welfare services expenditure (rather than cash payments) since, historically, these payments were paid to the service providers rather than directly to households.
Also, to maintain comparability over time, Youth Allowance (Students and Other), Austudy and ABSTUDY are not included in the estimates on this page, as mentioned earlier.
This line graph shows that cash payments has been larger than welfare services, followed by departmental administration costs over the whole period. Cash payments increased steadily over the period 2009–10 to 2015–16 before decreased in the next three years, then rose sharply in 2019–20. Over the same period, welfare services increased steadily most of the years except a slight decrease in 2013–14.
In contrast to cash payments, spending on welfare services has grown steadily for several decades, with the NDIS having a particular impact in recent years on spending on disability services.
The welfare services spending estimates mentioned on this page include both direct government services and government funding to non-government community service organisations that provide welfare services.
Welfare services encompass a range of Australian and state and territory government services and programs to support and assist people directly and the community – such as family support services, youth programs, child care services, services for older people and services for people with disability.
Welfare services expenditure presented on this page is reported for the target groups specified in the COFOG-A (ABS 2015) for the provision of social protection as services provided to individual persons and households, and as services provided on a collective basis:
Welfare spending defined according to these 4 target groups does not necessarily include all government spending on services that may have a welfare benefit. For example, some programs relevant to people with disability that might be considered welfare services are in the COFOG-A categories of education, health or housing. Employment services are not included. Australian Government and state and territory governments funding for welfare services for people with disability under the NDIS are included on this page.
Both the Australian and state and territory governments indirectly provide welfare services through funding non-government organisations (NGOs) to deliver services. The NGO sector also contributes some welfare services expenditure from its own sources, including fees charged to individuals.
Government funding to non-government community service organisations (NGCSOs) is included in welfare services expenditure. NGCSO expenditure that comes through fees paid by clients or from the NGCSOs’ own sources, such as fundraising, is not included, as comparable data on the sources of these funds are not readily available.
See Philanthropy and charitable giving for information on non-government donations.
In 2019–20, the estimated $195.7 billion of government welfare spending was distributed across these 4 target groups:
The remaining 6.3%, or $12.4 billion, was for other groups, including Indigenous people and people who are homeless or at risk of homelessness.
The 12% increase in government welfare spending between 2018–19 and 2019–20 can be attributed to increases in spending for:
Spending on other groups decreased by $0.2 billion (Figure 4).
This line graph showing government welfare expenditure by targe group over the period 2009–10 to 2019–20. Over the period, the welfare expenditure for older people has been larger than for people with a disability, families and children, followed by unemployed people and other welfare groups. The welfare spending on unemployed people, people with a disability, older people and families and children increased in 2019–20 while the expenditure on other groups decreased over the same period.
Welfare spending for the unemployed people almost doubled from $9.8 billion in 2018–19 to $18.5 billion in 2019–20 as the Australian Government’s COVID-19 economic response measures took effect, especially an increase in the number of recipients of eligible payments (DSS 2020a). This sudden increase was against a background of relatively stable spending over recent years.
Figure 5 shows a large increase in the number of welfare benefit recipients for eligible unemployed people in the last 2 quarters of 2019–20 compared with the previous period. The number of recipients almost doubled – from about 730,000 (Newstart Allowance, December 2019) to 1,440,000 (JobSeeker Payment, June 2020) between the second and fourth quarters of 2019–20.
This line graph shows the number of welfare benefit recipients for eligible unemployed people over the period Quarter 3-2016 to Quarter 2-2020. The recipient number was quite stable over the period up to the third quarter in the financial year 2019–20 at about 700,000. Then the number of welfare benefit recipients peaked in the fourth quarter in this year following the impact of the COVID-19 pandemic.
In 2019–20, the total amount spent for people with disability was $50.3 billion – an increase of 14% ($6.3 billion) from 2018–19 (in real terms). Between 2016–17 and 2019–20, spending on people with disability increased at an annual average rate of 11%, which is higher than the average over the decade since 2009–10 (5.6%). This upward trend appears to be mainly caused by the roll-out of the NDIS (DSS 2020a).
The NDIS provides support for Australians with permanent and significant disability, and their families and carers. The Scheme began in 2013–14 across trial sites, with the transition to the full scheme starting in all states and territories (except Western Australia) in 2016–17.
The Australian and state and territory governments jointly fund the NDIS through intergovernmental agreements.
See the Intergovernmental agreements for more information on these agreements.
Sources and bases of data
Various tax exemptions, deductions, offsets, concessional rates and deferral of tax liabilities are provided for welfare purposes. The tax expenditure (or concessions) by the Australian Government for welfare was estimated to be $55.3 billion in 2019–20. This amount does not include any tax expenditures by state and territory governments, or by local governments. It is not included in the estimates of total welfare spending presented on this page as it is generally in the form of foregone potential revenue rather than expenditure (Department of the Treasury 2021).
Most of the tax concession amount ($40.7 billion, or 74%) was for concessions for superannuation, which aim to assist people to save for or fund their retirement. Of the remainder, $3.6 billion (6.4%) was for concessions for families and children (Department of the Treasury 2021). Tax concessions for families and children include exemption from taxation for Family Tax Benefits and Child Care Assistance payments.
Australian Government tax concessions for welfare (mainly concessions for older people) were quite stable over the period 2009–10 to 2013–14; they then increased steadily over the next 5 years before falling in 2019–20 (Figure 6). This decline in concessions in 2019–20 was largely related to the decrease in concessional taxation of superannuation entity earnings (Department of the Treasury 2021).
This line graph shows tax concessions by the Australian governments for welfare by target groups in the period 2009–10 to 2019–20 in constant prices. Over the period, the tax concessions for older people has been larger than those for families and children, followed by those for other groups. The tax concessions for older people was quite stable over the period 2009–10 to 2013–14 before increased steadily in the next five years, then decreased in 2019–20. The tax concessions for families and children have remained stable over the period.
There are many difficulties in comparing welfare spending across countries. Social support structures in many countries are complex, and not necessarily comparable. Systems generally involve mixtures of:
Organisation for Economic Co-operation and Development (OECD) data for 2017 (the latest data available) show that welfare expenditure in Australia was 10% of GDP (using the OECD methods for calculating expenditure, which differ from those used for estimates elsewhere on this page). This figure of 10% was lower than the OECD median of 13% (Figure 7) and puts Australia’s welfare expenditure in the lowest third of all OECD countries (OECD 2021). The impacts of the COVID-19 pandemic on the international comparisons of welfare expenditure remain to be seen when more updated OECD data become available.
This horizontal bar chart shows welfare expenditure as a proportion of GDP across OECD countries in 2017. Finland had the highest proportion (22%), followed by France and Italy (21%). Mexico ranked the lowest (about 4%). Australia ranked below the OECD median.
For more information on Welfare expenditure, see:
ABS (Australian Bureau of Statistics) 2005. Australian system of government finance statistics: concepts, sources and methods, 2005. ABS cat. no. 5514.0. Canberra: ABS.
ABS (Australian Bureau of Statistics) 2015. Australian system of government finance statistics: concepts, sources and methods, 2015. ABS cat. no. 5514.0. Canberra: ABS.
ABS 2021a. Australian national accounts: national income, expenditure and product, December 2020. ABS cat. no. 5206.0. Canberra: ABS.
ABS 2021b. Government finance statistics 2019–20. ABS cat. no. 2212.0. Canberra: ABS.
ABS 2021c. Taxation revenue, Australia, 2019–20. Customised report. Canberra: ABS.
Department of Health 2020. Budget statements 2019–20, Health portfolio. Canberra: Department of Health.
Department of Health 2021. Budget 2020–21: Health portfolio Budget statements. Canberra: Department of Health.
Department of the Treasury 2021. Tax benchmarks and variations statement 2020. Canberra: Department of the Treasury.
DESE (Department of Education, Skills and Employment) 2020. Portfolio additional estimates statements 2019–20, Education, Skills and Employment portfolio. Canberra: DESE.
DESE 2021. Portfolio additional estimates statements 2020–21, Education, Skills and Employment portfolio. Canberra: DESE.
DSS (Department of Social Services) 2020a. Annual report 2019–20. Canberra: DSS.
DSS 2020b. Portfolio additional estimates statements 2019–20, Social Services portfolio. Canberra: DSS.
DSS 2021a. DSS payment demographic data. Canberra: DSS. Viewed 11 February 2021.
DSS 2021b. Portfolio additional estimates statements 2020–21, Social Services portfolio. Canberra: DSS.
DVA (Department of Veterans’ Affairs) 2020. Portfolio additional estimates statements 2019–20, Defence portfolio. Canberra: DVA.
DVA 2021. Portfolio additional estimates statements 2020–21, Defence portfolio. Canberra: DVA.
OECD (Organisation for Economic Co-operation and Development) 2021. OECD.StatExtracts. Social expenditure aggregated data. Paris: OECD. Viewed 24 January 2021.
NDIA (National Disability Insurance Agency) 2021. Intergovernmental agreements. Canberra: NDIA. Viewed 10 February 2021.
PM&C (Department of the Prime Minister and Cabinet) 2020. Portfolio Budget statements 2019–20, Prime Minister and Cabinet portfolio. Canberra: PM&C.
PM&C 2021. Portfolio additional estimates statements 2020–21, Prime Minister and Cabinet portfolio. Canberra: PM&C.
Productivity Commission 2017. Indigenous expenditure report 2017. Canberra: Productivity Commission. Viewed 15 January 2021.
Productivity Commission 2021. Report on Government Services 2021. Canberra: Productivity Commission. Viewed 22 February 2021.
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