Australia is on the brink of a significant increase in welfare spending, with projections indicating that federal social expenditures might soon match or even exceed the total economic output of New Zealand.

Recent government data reveals that welfare costs are climbing at a rate far beyond initial Treasury predictions. This trend is highlighted by a series of upward revisions, which point to a widening chasm between estimated forecasts and the actual fiscal reality.

According to the most recent Mid-Year Economic and Fiscal Outlook (MYEFO), Australia’s social security and welfare expenses are anticipated to hit $329 billion by the year 2029.

Given the Treasury’s history of underestimating this growth, many experts predict that these figures will likely increase in future assessments.

The budget’s allocation for ‘social security and welfare’ encompasses a wide range of support, including the Age Pension, Disability Support Pension, JobSeeker, various family and student payments, veterans’ income support, and the National Disability Insurance Scheme (NDIS).

To put this in perspective, the current valuation of New Zealand’s entire economy stands at approximately $368 billion, underscoring the magnitude of Australia’s projected welfare expenditure.

MYEFO data show Treasury has consistently assumed slower growth than has actually occurred, then quietly revised spending higher each year as costs blow past projections. 

If those misses persist, Australia’s welfare bill could realistically match, or exceed, New Zealand’s GDP by around 2030, or even earlier should current trends continue.

Total welfare spending in Australia could exceed the entire New Zealand economy by 2030

The NDIS sits at the centre of the surge. 

The scheme already costs taxpayers $46.2billion a year, making it one of the fastest‑growing expenses in the federal budget. 

It is expanding at 10.6 per cent annually, and government forecasts suggest its cost could climb to $60–70billion a year by the end of the decade unless growth is restrained.

Alarmed by that trajectory, the government has flagged plans in the May Budget to rein in NDIS growth, targeting a reduction in annual increases from around 8 per cent to a more ‘manageable’ 5 per cent. 

Whether that goal can be achieved remains uncertain, particularly given past difficulty controlling costs.

Treasury’s own revisions reveal the problem. 

In 2023–24, MYEFO projected welfare spending would reach $287billion by 2026–27.

The latest update now puts the figure at $303billion for the same year, a $16billion blowout in just three years. 

Treasurer Jim Chalmers (pictured) is under pressure to rein in spending in May’s budget

The revision highlights a familiar pattern, with Treasury understating welfare growth by as much as $15billion a year and repeatedly lifting forecasts as actual costs overrun expectations. 

Critics argue this pattern means the current $329billion projection for 2029 is unlikely to be the final figure, increasing the risk Australia’s welfare bill soon rivals the economic output of an entire neighbouring country.

Shadow Treasurer Tim Wilson accused the government of losing control of welfare spending and ignoring widespread fraud within the NDIS. 

Senate estimates hearings have previously heard that fraud, non‑compliance and inappropriate payments may account for up to 10 per cent of the scheme, costing taxpayers as much as $5billion a year.

‘We all support a welfare system that helps those in need,’ Wilson told Daily Mail. 

‘But when the government admits 10 per cent of the $50billion NDIS bill is going toward fraud and corruption, I have little confidence the Albanese government can contain spending.’

He said Labor’s fiscal management was also worsening inflation and debt.

‘With Jim Chalmers pouring debt petrol on the inflation fire, costs will continue to increase,’ Wilson said. 

The budget’s ‘social security and welfare’ package includes the Age Pension, Disability Support Pension, JobSeeker, family and student payments, veterans’ income support and the National Disability Insurance Scheme (NDIS) (pictured are people at a Melbourne Centrelink office)

‘They will outstrip any support Australians receive, while the debt bill continues to balloon.’

The government has rejected claims that Australia is facing an uncontrolled welfare blowout, insisting spending remains stable despite Treasury revisions. 

A spokesperson for the Department of Social Services said changes were modest and well within normal budget variation.

‘The Australian Government is committed to making sure it is there to support those who need it most when they need it, and ensure value for money for taxpayers,’ the spokesperson told Daily Mail.

They pointed to the latest MYEFO as evidence spending was tightly managed. 

‘In the latest 2025–26 MYEFO update, the variation on social security spending represented less than a one per cent change since the 2025–26 Budget,’ the spokesperson said.

The department said fluctuations were routine and largely driven by factors beyond the government’s control. 

‘It is normal for there to be expenditure variations in the Social Services portfolio, for instance due to changes in payment populations and indexation amounts,’ the spokesperson said.

They also stressed the higher projections did not reflect policy changes. 

‘The variation did not reflect policy changes to any payment in the Social Services portfolio,’ the spokesperson said, adding that social security spending had remained stable outside extraordinary events such as the Covid‑19 pandemic.