Labor has accused the Abbott government of exaggerating welfare spending to justify cuts, pointing to figures that show Australia spends less on welfare than most developed nations.

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

Of 34 industrialised nations, only Iceland, which spent 7.3 per cent of GDP on payments, put a smaller level of economic output into 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.