Labor has accused the Abbott government of exaggerating Australia's welfare spending to justify cuts, pointing to new figures which show the nation spends less than most other developed nations.

Social Services Minister Kevin Andrews this week warned that ''relentless'' growth in spending on welfare payments was ''unsustainable''.

He has commissioned former Mission Australia head Patrick McClure to review the welfare system, with a focus on the Newstart allowance or unemployment benefit and the disability support pension.

''We've got to ensure in the future that we're able to sustain the welfare system, otherwise we'll find ourselves in 10 or 15 years' time in the situation that some of the countries in Europe are in,'' Mr Andrews told ABC radio on Tuesday.

But figures compiled by the Organisation for Economic Co-operation and Development show Australia's spending on welfare benefits in 2013 accounted for 8.6 per cent of national economic output, well below the OECD average of 13 per cent.

Of 34 industrialised nations for which data was available, only Iceland, which spent 7.3 per cent of GDP on payments, spent a smaller proportion of its economic output on welfare than Australia.

Four European nations - France, Italy, Belgium and Austria - were the biggest spenders, each allocating more than 19 per cent of their GDP to welfare payments, including age and disability pensions, unemployment benefits and family payments.

Britain spent 12.2 per cent of its GDP on social security payments, while the United States spent 9.7 per cent.

Labor's spokeswoman on families and payments, Jenny Macklin, said the figures disproved the government's claims about the scale of Australia's welfare spending. ''This clearly shows the government's claims that Australia is heading for some sort of welfare crisis are complete rubbish. The Coalition is trying to scare Australians into accepting a savage round of cuts,'' Ms Macklin said.

She criticised Mr Andrews for excluding the Coalition's $5.5 billion paid parental leave scheme - in which the baby's primary carer would receive six months' leave on their full pay, up to a maximum benefit of $75,000 - from the scope of Mr McClure's review. ''If the Prime Minister wants to tackle welfare reform, he should start by scrapping his ridiculous expansion of middle-class welfare on the back of low income earners, pensioners, carers and people with disability,'' Ms Macklin said.

But Mr Andrews defended the scheme, saying it should not be regarded as welfare but a work-related payment. ''If it's a measure which ensures two things, one is we continue to grow our population, and secondly, we continue to have enough workers in the workforce, that's very much an economic matter related to the future economic growth of the country,'' he said.

Economists have also criticised the government for excluding the age pension, which at a cost of $36 billion accounts for roughly half the welfare budget, from the review.

Coalition Fears On Welfare Spending Not Justified, Says Labor