Federal Labor insists Australia’s welfare system is not out of control as the government eyes sweeping reforms.

Social Services Minister Kevin Andrews on Sunday released an interim report into welfare reform, arguing the system was unsustainable and complex.

According to the report, some people on the disability support pension could be moved onto the working-age payment along with jobseekers, parents and carers.

Only those with permanent disabilities would have access to the pension.

Labor’s disability spokeswoman Jenny Macklin disagrees with the government’s assessment.

“Australia does not have an out-of-control welfare system as the Abbott government tries to suggest,” Ms Macklin told ABC radio on Monday.

Australia spent the second lowest amount of all developed countries, she said.

Mr Andrews says many people claiming the disability payment had episodic mental illnesses and had the ability to work.

However, he acknowledged getting those people into work and encouraging employers to employ them was part of the challenge.

Ms Macklin says the government already has “outrageously demonised” people with disabilities during the past six months.

Under the reforms, welfare payment categories be culled from 20 to four: a tiered working-age payment, a disability support pension, an age pension and a child payment.

A new child payment could replace Family Tax Benefit Part A, Youth Allowance, Abstudy and other payments.

Young people from disadvantaged backgrounds would be expected to undergo early intervention programs focused on education or training.

Mr Andrews defended the six week timeframe for public comment.

Assistant social services minister Mitch Fifield criticised Ms Macklin for her “scaremongering”.

“I hope Jenny Macklin can rise above partisanship and work with us to seek to make our system of support better,” he told Sky News.

Opposition leader Bill Shorten said Labor supported the principle of simplification but wouldn’t be party to the “mugging” of people with disabilities.

“Labor supports the principle of simplification,” Mr Shorten told reporters in Melbourne.

“We’re certainly up for having an intelligent, sensible discussion about how we do these things.”

“But what we won’t do is be party to the mugging of people with disabilities by a cruel government who’s not interested in people with disabilities.”