Older Australians working longer but still rely on pension

WELFARE reliance is at its lowest point in at least 20 years and older Australians are working longer, but still relying on the aged pension to help fund their retirement, a major survey shows.

The annual Household Income and Labour Dynamics in Australia survey released on Monday, has "put paid" to the government's claims of rising welfare dependency, Labor leader Bill Shorten said.

Treasurer Joe Hockey, selling his first budget, has repeatedly claimed the rise in welfare payments was undermining efforts to return the budget to surplus.

But while the government's overall budget burden continues to grow, largely due to population growth, fewer Australians are reliant on handouts now than 20 years ago, the survey shows.

The University of Melbourne's survey of 17,000 Australians' income shows a 5% fall in reliance on welfare over the past decade among all adults, with similar declines among retirees and working Australians.

Report author Dr Roger Wilkins wrote the data that showed welfare reforms in 2006 and later years - designed to get more people working - "may therefore be having the desired effect".

The data, he wrote, also showed young people were welfare reliant for one year, or two to five years in the past 11 years; and those aged 45 to 55 to have longer-term welfare reliance, partly due to age and disability pensions.

It also showed older Australians reliant on government benefits fell 2.3%, but remained at more than half of those older than 55, at 63.5% in 2011.

Mr Shorten told reporters on Monday the data put paid to the government's arguments that cuts to welfare were needed in the May budget.

Mr Hockey said in Question Time, employment figures release last week showed 100,000 full-time jobs were created since the start of the year.

He said while there was still more work needed to be done; "our formula for the economy is working", despite the HILDA data appearing to undermine the government's planned cuts to welfare.

Those budget measures, mainly changes to the indexation of welfare payments, will face a fiery debate when they reach the Senate, with Labor, The Greens and Palmer United Party vowing to fight various measures.