Benefits and financial impact of reform

The Welfare to work package is a significant investment in individuals, their families and Australia’s future economic performance — at a cost of $3.6 billion over four years.

Benefits

Reforming the welfare system will have a significant positive impact on the economy.

The reforms will result in increased labour force participation and higher employment over time. This will generate stronger economic growth, increasing individuals’ and Australia’s prosperity.

However, increased participation may lead to the measured unemployment rate also rising in the short term, due to participation initially rising faster than employment. Over time, this will dissipate as job opportunities are taken up by those people who are participating in the workforce.

Financial Implications

More than $2 billion will be spent on services to underpin the reforms over the four years commencing 2005-06. This includes:

• $681 million on Job Network
• $266 million on child care
• $170 million on disability open employment services.

The changes to Newstart will cost $943 million over four years.

The total cost of the package is $3.6 billion over four years.

A welfare to work package costing $3.6 billion over four years

12 2005-06 Budget