The number of people accessing financial support because they can’t work due to injury or illness has surged in Australia over the past decade, with two million more Australians now claiming income support payments.
New research commissioned by the Council of Australian Life Insurers (CALI) and prepared by SuperFriend shows that growing demand is putting the nation’s financial safety net under significant pressure.
Income support claims are rising across government, employers and insurers, with mental health conditions the key driver.
“This report shines a light on a major productivity challenge facing our nation. More and more Australians are taking time off work and getting financial support because they’re injured or sick, with mental health conditions often the main reason,” CALI CEO Christine Cupitt said.
“The surge in mental health claims is testing the income support safety net’s ability to cope because it wasn’t built with mental health in mind,” she said.
“No single part of the safety net can tackle this challenge alone. We need a connected and coordinated approach, led by the Federal Government, to respond to the productivity challenge of mental ill-health in our community.”
Ms Cupitt added the lack of coordination across systems can leave people making difficult financial decisions, with consequences extending beyond health and into long-term financial security.
“Without clear, coordinated pathways and earlier access to support across the ecosystem, Australians risk missing out on help that could make a real difference to their recovery and their connection to work,” Ms Cupitt said.
The reportfinds 8.5 million people accessed some form of income support in the past year, claiming a total of $78.9 billion.
The Cross Sector Project Update, Mapping Australia’s ecosystem of income supports report maps 11 distinct income support systems that together make up Australia’s broader income support ecosystem.
It spans employer-funded sick leave, workers’ compensation, life insurance, social security payments, motor vehicle compensation schemes, veteran compensation and pensions, and early superannuation withdrawals.
Life insurance plays a distinct role within the ecosystem, typically supporting people later in their income support journey. Mental ill-health accounts for around one in three total and permanent disability claims and one in five income protection claims.
“By the time someone turns to life insurance, they have often moved through other parts of the ecosystem. These claims tend to be more complex and longer in duration,” said Ms Cupitt.
In 2023/24, life insurers paid $8.3 billion in income protection and total and permanent disability benefits, supporting approximately 55,000 Australians unable to work, representing 11 per cent of the total national income support.
The research also highlights the complexity of navigating multiple different systems when support is needed.
“This report shows that Australians don’t have a single, clear income support pathway. Many people need financial assistance when they are unwell or unable to work, and it can be confusing to find out where to go and how to apply,” said Dr Ross Iles, Chief Research Officer, SuperFriend.
He said the findings reinforce the importance of keeping people connected to work wherever possible.
“Participating in work has clear health benefits, both on physical and psychological levels for individuals, and on multiple levels of society in general. However, the longer someone is out of work, the less likely they are to return to work,” he said.