More than 8 million Australians now rely on income support as health-driven work loss rises
A growing safety net under strain
More than 8 million Australians now rely on some form of income support each year, according to newly compiled data that points to a steady expansion in demand over the past decade. The increase is significant: around 2 million more people are accessing payments than 10 years ago.
The findings suggest the nation’s income support landscape is being asked to carry a larger share of the community than it was originally designed for. Researchers and industry groups say the growth is being driven by a rising number of Australians whose mental and physical health has deteriorated to the point they can no longer work, either temporarily or for extended periods.
The data covers demand across 11 separate income support systems, spanning employer-provided sick leave, workers’ compensation, social security payments, superannuation and life insurance claims. While these supports differ in purpose and eligibility, the overall picture is of a broader and more complex pipeline of people moving through multiple schemes as their health and work capacity change.
Most support is short-term sick leave, but longer-term reliance is increasing
Although the headline figure is large, the majority of people receiving some form of income support are not necessarily on long-term welfare payments. The data indicates that about 7.5 million Australians are accessing more employer-provided sick leave, typically for relatively short periods of around three weeks.
However, the report also highlights a trend that is worrying policymakers, researchers and insurers: more people are exhausting sick leave and shifting into longer-term forms of support. Once that happens, the chances of returning to work tend to diminish.
This shift matters because the systems that provide longer-duration assistance—whether through insurance, social security or other pathways—often involve more complex assessments and longer processing times. As a result, delays and administrative burdens can compound the challenges people already face when they are unwell.
Mental ill health is reshaping the claims profile
One of the most prominent changes identified in the data is the growing role of mental ill health. Mental ill health now accounts for about one-third of claims across Australia’s major income support schemes, based on data compiled by researchers at Monash University and SuperFriend for the Council of Australian Life Insurers (CALI).
Christine Cupitt, chief executive of CALI, described the situation as a national productivity challenge and said the system is under pressure. She argued that mental health has “changed the profile” of claims, with these cases often being more complex and longer in duration.
The data also indicates a sharp increase in mental health claims among some groups. Over a 10-year period, mental health claims by Australian workers aged between 30 and 40 have increased by more than 730 per cent.
While the report’s figures capture a range of supports, the common theme is that mental health-related work loss can be harder to resolve quickly. When a person’s capacity to work is reduced for an extended period, they may cycle through multiple schemes—particularly if initial supports end or if eligibility decisions change.
A personal example: living with Long COVID and reduced work capacity
The data is reflected in individual experiences, including that of Lauren Frahamer, 30, who was unable to continue full-time work due to Long COVID.
Before becoming ill, she worked as a stage manager on major musical theatre productions, logging around 50 hours a week, often at night and on weekends. She also maintained an intense fitness routine that included gym sessions, swimming, running and yoga.
She contracted COVID-19 in December 2021 during an outbreak that spread through her workplace. She described the acute illness as “brutal but unremarkable”—weeks of fever, pain and exhaustion—but said recovery did not follow.
After trying to return to work for about a month, she found she could not continue. She experienced extreme fatigue and brain fog, and said she struggled to remember a sentence well enough to pass a message on—an issue that directly affected her ability to do a job requiring sustained focus.
As her symptoms dragged on, she said confusion and fear set in. She later resigned, moved back to Melbourne to be closer to family, and began treatment through an allied health clinic specialising in complex, long-term conditions.
A turning point came when her partner at the time was made redundant, prompting her to look more closely at what support was available. She said she did not know whether Long COVID would be recognised or whether it was claimable.
In mid-2022, she was granted partial income protection, which she said helped her maintain independence. She described burning through savings quickly due to rent, everyday living costs, appointments and medications, and said that without income protection she would have had to move back in with her parents and become dependent again.
She now works nine hours a week from home in client support at the same allied health clinic that once treated her—about 40 per cent of her former capacity. She has been at that level for about a year and remains determined to take steps toward full-time work again.
Common misunderstandings about income protection
The report also points to confusion about how some supports work, particularly income protection insurance. People often—wrongly—believe income protection would be paid out if a person was unable to work due to losing their job for any reason.
This misunderstanding can affect how quickly people seek help, what they expect from insurers and employers, and how they plan financially when illness reduces their ability to work. In practice, people may only discover the limits and requirements of different supports once they are already under pressure.
Fragmentation across 11 systems adds burden when people are unwell
Associate Professor Ross Iles, a Monash University researcher and chief research adviser at SuperFriend, said the number of working-age Australians needing income support has risen steadily and that mental health appears to be taking a bigger toll on people’s ability to work.
He also pointed to a structural issue: fragmentation. Australia’s income support arrangements are not a single unified program but a collection of schemes, each with different eligibility rules, medical evidence requirements and application processes.
That complexity can become especially difficult when a person’s circumstances change. If a workers’ compensation claim is rejected and someone needs to turn to insurance or social security, it can mean starting again with a new application—new forms, new medical assessments and new processes. When someone is unwell, Mr Iles said, that burden is enormous.
Fragmentation can also slow down access to treatment and coordinated support. In the data and commentary presented, delays in treatment, claim processing and coordination are linked to reduced recovery prospects and increased long-term costs.
The cost and the stakes: close to $80 billion a year
Beyond the number of people affected, the scale of spending underscores why the issue has become a focus for researchers and insurers. Mr Iles said Australia is spending close to $80 billion a year on income support.
While the figure reflects a broad range of payments and programs, it highlights the size of the system and the importance of how effectively it supports people to recover and, where possible, return to work.
Mr Iles emphasised a widely observed pattern in work absence: the longer a person is out of work, the less likely they are to return. From this perspective, delays—whether in treatment, decision-making or coordination—can have lasting consequences for individuals and for the overall cost of support.
Insurers argue intervention often comes too late
Life insurers say the current system tends to intervene too late, after people have already left the workforce or moved from short-term supports into longer-term reliance. CALI, whose members have a direct commercial interest in reducing long-term income protection claims, argues that earlier intervention is critical.
The industry position is that better-coordinated support should be offered while people are still working, rather than waiting until a person has exhausted sick leave or navigated multiple schemes. The report’s broader findings—rising demand across all 11 systems and the growing role of complex mental health claims—are used to support the case for earlier action.
Ms Cupitt said the system cannot afford to operate in silos while more Australians get sick and leave the workforce. She described the situation as a “burning platform,” reflecting the urgency that insurers and researchers attach to the trend.
What a coordinated overhaul could involve
Insurers are calling for a government-led overhaul that links Australia’s 11 income support systems to employers, insurers and public agencies. The aim would be to reduce duplication and friction when people move between supports and to identify risks earlier.
As outlined in the report’s discussion, a more unified approach could include:
Nationally consistent definitions for mental health, to reduce variation in how claims and eligibility are assessed.
Shared data, enabling better understanding of pathways through different schemes and earlier identification of people at risk of long-term work loss.
Improved identification of people at risk of prolonged absence from work, with support offered earlier.
Smoother transitions between supports, reducing the need for repeated applications and assessments when circumstances change.
The argument is not simply about administrative efficiency. For people experiencing illness, particularly mental ill health or complex long-term conditions, the burden of navigating multiple systems can be significant. Reducing that burden could help people focus on treatment and recovery rather than paperwork and repeated assessments.
The central tension: rising need, complex claims, and systems built to operate separately
The data paints a picture of rising reliance on income support that is not confined to one payment type or one institution. Demand has increased across all 11 systems examined, from sick leave and workers’ compensation to social security and insurance. Most people are using employer-provided sick leave for short periods, but a growing number are moving into longer-term support.
At the same time, mental ill health is accounting for a substantial share of claims and is associated with longer, more complex durations. Among workers aged 30 to 40, the increase in mental health claims over the past decade is particularly striking.
Researchers and insurers converge on one key point: fragmentation makes the experience harder for individuals and may worsen outcomes by delaying coordinated care and support. With close to $80 billion a year spent on income support, the pressure to improve how the system functions is not only financial but also tied to workforce participation and the lived reality of people trying to recover.
For individuals like Ms Frahamer, who moved from a demanding full-time career to working a fraction of her previous hours while managing ongoing symptoms, the broader trends are not abstract. They shape how quickly support can be accessed, how sustainable life is during illness, and how realistic it is to plan a path back to work.
The report’s message is that the scale of reliance has changed—and the systems designed to respond may need to change with it, particularly if earlier intervention and better coordination can prevent more Australians from slipping into long-term work loss.