Australia's welfare agencies are in serious trouble, with more than three-quarters of them operating at maximum capacity.

Thousands of people are being turned away from services, while agencies are placing more pressure on their employees, increasing waiting lists, reducing the level of service and using up their financial reserves, an Australian Council of Social Service survey found.

Since January, 77 percent of agencies had experienced an increase in demand, with one in four unable to cope with the pressure, yesterday's report said.

ACOSS president Michael Raper said the report, Living on the Edge II, showed many agencies were stretched to the limit.

He called on the Government to give greater support to welfare agencies, many of which had experienced increased demand because of changes to Government policies, including the Common Youth Allowance, changes to social security and cuts in legal aid funding.

"The results are showing that things are getting worse, not better," Mr Raper said.

"There is not only a budget surplus but there is a community deficit emerging very strongly in Australia and community services are not able to meet that need."

Sydney City Mission chief executive officer Patrick McClure said the number of people turned away by welfare agencies was rising.

"It's one of the tragedies that at a time of economic growth there has been no real growth in supported accommodation assistance funding over the past five years," he said.

The problems included:

• One in two, or 28,000 people, turned away from supported accommodation services in 1997.
• A waiting list of at least 10 weeks for services for people with gambling problems in Queensland.
• Women and children staying in violent situations because they cannot get support.
• More young people seeking support because of the introduction of the Common Youth Allowance.

PARENTS on payments, long-term dole recipients and disabled pensioners will be targeted under proposals for a sweeping welfare clampdown by the Howard Government.

The plans, to be unveiled in a discussion paper next week, are part of the Government's campaign to reduce dependence on welfare. The changes, which could be implemented as early as mid-2000, are believed to include:

• Lowering the age limit of a child that entitles a parent to income support.
• Extending the obligations of sole parents to include mandatory career development counselling.
• An extension of the work-for-the-dole scheme to unemployed people aged over 35.
• A widespread tightening of people receiving disability pensions.
• A strategy to target inconsistencies in the welfare system

A spokesman for Senator Newman, who refused to detail the measures, said the discussion paper would "air a range of options" to address pockets of welfare dependency.

"Just like the tax system, the social security system developed in an ad-hoc manner and is not tailored to the modern economy where people must accept responsibility to educate and re-train themselves back into work if they are able," he said.

"The measures in the discussion paper addressed specific problems that are emerging in our income support system that if left unchanged will leave Australia behind the rest of the world in social policies."

The proposals included a move to lower the age limit of a child - currently 16 - that entitles a parent to income support.

Australia's social security system is considered generous compared with other western countries, where parenting payments usually stop when the youngest child turns 12.

The discussion paper also will air an extension of mutual obligation measures, currently being tested on 2000 sole parents, to other long term recipients of the benefit.

Sole parents, who account for 75 percent of the 600,000 people currently receiving the benefit, are a target for the proposed changes.

But the mutual obligation measures, which would include mandatory career development counselling, are expected to extend to partnered parents who have been on the benefit for years.

The discussion paper is understood to back extending the work for the dole programme to people older than the current limit of 35.

The emerging generation of baby boomers on welfare will be targeted with measures to reduce the number of disability pensioners and address the disproportionate number of recipients who are men in their middle age.

Almost 580,000 Australians receive disability pensions compared with 660,000 on unemployment benefits.

Included in the proposals under consideration will be a move to "raise the bar" of incapacity needed to receive the pension payment. Mutual obligation measures, that will include mandatory rehabilitation for those less incapacitated, will be among the main initiative being considered to encourage pensioners back to work.

Opposition social security spokesman Wayne Swan said he could not accept the proposals would improve the welfare system.

"It is just callous cost-cutting which targets the sick and poor people with children," Mr Swan said.

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