Recent years have seen an increasing prevalence in Australia of the view that many of those receiving unemployment benefit are 'cheating' the system, either by direct fraud, or by lack of willingness to find employment. This paper addresses these issues in three sections. First, via a review of available information on the work incentive effects of unemployment benefits; second, with an analysis of statistical trends which some commentators claim show evidence of increasing fraud; and third, through a broader consideration of the structure of the income support system for the unemployed. It is concluded that whilst the level of benefit may have some effect on job search effort, other factors are probably more important, and that evidence of increasing fraud is unclear. These issues are placed in the wider context of the re-structuring of the system of income support for the unemployed.