Federal Politics

Kevin Andrews to target dole and disability payments

The Abbott government will exclude the age pension and family tax benefits from its review of Australia's welfare system, with Social Services Minister Kevin Andrews indicating he will target unemployment benefits and disability pensions.

Warning the system risked becoming ''unsustainable'', Mr Andrews has commissioned former Mission Australia head Patrick McClure to conduct a ''broad'' review of payments, which are worth more than $70 billion a year.

But the age pension - which at $36 billion last financial year accounts for roughly half of all welfare - will not be examined in the review. Nor will the review consider Family Tax Benefits Parts A and B, which cost the budget $19 billion last year, or Mr Abbott's $5.5 billion-a-year paid parental leave scheme.

Asked why he was excluding these expensive programs, Mr Andrews said: "This is essentially a limited review … It's about the normal things, DSP [disability support pension], Newstart, that sort of thing, basically.''

Mr Andrews has said the scope of the review will be limited to ''working age'' payments, such as the Newstart allowance and the Disability Support Pension.

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Cassie McGannon, the Grattan Institute's Australian perspectives fellow, said it seemed ''short-sighted'' to exclude the age pension from the review.

''There are big chunks of money under the age pension going to people who are relatively well-off. If we look at the what the government pays out under the age pension, about half of it goes to households who have more than half-a-million dollars in assets,'' she said.

Ms McGannon contributed to a Grattan Institute report released last year which proposed lifting the pension and superannuation preservation ages to 70 to save $12 billion a year. The report said including owner-occupied housing in the assets test for the age pension would save a further $7 billion a year, dwarfing what savings could be made from the Newstart allowance, which had a total cost of $7.5 billion in 2012-13.

Ben Phillips, principal research fellow at the National Centre for Social and Economic Modelling at the University of Canberra, said the age pension was likely to grow faster than any other part of welfare spending, and concerns about the sustainability of the welfare system were ''somewhat overstated'', noting spending on unemployment benefits had declined as a proportion of economic output.

Opposition Leader Bill Shorten said Mr Abbott should "get rid of the multimillionaires' welfare". "Get rid of this gold-plated paid parental scheme," Mr Shorten said.

with Paddy Doulman

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