"often analysts point to an improvement in the unemployment numbers whilst completely ignoring the fact that it was people giving up which drove unemployment down."
You make a good point but that argument has a flip side. People join Newstart purely because they can. Why not pick up some of your taxes whilst 'looking' for a job? Then when you really want a job, just get one. Don't believe the 'unemployed' figures as desperate people searching for work.
The argument that people come off Newstart(hence reducing unemployment stats) due to giving up looking for work is an utter disbelief. Why would you give up a perpetual payment?
People only come off Newstart if they're kicked off it or transfered to another payment, like a pension.
