The Growing Demand for Income Support in Australia
More than 8 million Australians now rely on some form of income support, highlighting the increasing strain on a safety net that was never designed to accommodate such a large number of people. This surge is largely driven by individuals whose physical and mental health has deteriorated to the point where they can no longer work. According to data compiled by researchers at Monash University and SuperFriend for the Council of Australian Life Insurers (CALI), mental ill health now accounts for about one-third of claims across Australia’s major income support schemes.
Christine Cupitt, chief executive of CALI, emphasized the national productivity challenge this situation presents. “It’s not just one part of the system under pressure — the entire safety net is under strain,” she said. CALI, which represents insurers with a vested interest in reducing long-term income protection claims, advocates for earlier intervention as a critical solution.
A System Under Pressure
The report found that demand for income support has increased across all 11 of Australia’s systems, including employer-provided sick leave, workers’ compensation, social security payments, superannuation, and life insurance claims. While around 8 million Australians receive some form of income support each year, the majority — approximately 7.5 million — access employer-provided sick leave, typically for short periods of around three weeks. However, more people are exhausting their sick leave and transitioning into longer-term support, where the chances of returning to work decrease significantly.
Mental health has become a leading driver of income support claims, according to Ms. Cupitt. “These claims tend to be more complex and longer in duration,” she noted. This shift in the profile of claims reflects a broader trend of mental health issues impacting the workforce.
Personal Impact: A Story of Recovery
For 30-year-old Lauren Frahamer, the statistics are deeply personal. After contracting long COVID in December 2021, she found herself unable to return to her previous job as a stage manager, which required long hours and intense focus. “I had extreme fatigue and brain fog,” she said. “My job depends on focus for hours at a time, and I just didn’t have it.”
Ms. Frahamer’s experience highlights the challenges faced by those dealing with long-term health conditions. She eventually resigned and moved back to Melbourne, seeking treatment through an allied health clinic. The turning point came when her partner was made redundant, prompting her to explore available support systems. In mid-2022, she was granted partial income protection, which she credits with keeping her from losing independence entirely.
“It didn’t take long to burn through my savings,” she said. “Without income protection, I would’ve had to move back in with my parents.” Today, she works nine hours a week in client support at the same clinic that once treated her, aiming to gradually increase her workload.
The Need for Earlier Intervention
Associate Professor Ross Iles, a researcher at Monash University and chief research adviser at SuperFriend, noted that the number of working-age Australians needing income support has risen steadily. He pointed to mental health as a growing factor in people’s inability to work. One of the key issues with the current system is its fragmentation, with each scheme having different eligibility rules, medical evidence requirements, and application processes.
Mr. Iles explained that when someone’s workers’ compensation claim is rejected, they often need to apply for insurance or social security, which involves new forms, assessments, and processes. “When you’re unwell, that burden is enormous,” he said.
He also highlighted that the longer a person is out of work, the less likely they are to return. Delays in treatment, claim processing, and coordinated support reduce recovery prospects and increase long-term costs. “We’re spending close to $80 billion a year on income support,” Mr. Iles said. “And that figure doesn’t even count lost productivity.”
Calls for Systemic Change
Life insurers argue that the current system intervenes too late. They advocate for earlier, better-coordinated support while people are still working, as well as a government-led overhaul that links Australia’s 11 income support systems to employers, insurers, and public agencies. This would involve nationally consistent mental health definitions, shared data, better identification of people at risk of long-term work loss, and smoother transitions between supports.
Ms. Cupitt emphasized the urgency of the situation. “There’s a burning platform here,” she said. “We can’t afford systems operating in silos while more Australians get sick and leave the workforce.”
