Thursday, 17 January 2013

Principles of Australia's welfare system

According to Matt Cowgill in Welfare reform: can we have it all?:
Three central principles in the Australian welfare system are:
  • Payments should be sufficient to protect people from poverty.
  • Payments should be means tested and targeted to people on low incomes.
  • ‘Poverty traps’ should be avoided. It should be financially worthwhile for people to take a job, or to increase their hours of work.
 Matt shows, using some simple examples, that you can implement policies that can achieve two of these principles, but not all three:

If you want to argue that our welfare system, which already has less ‘middle class welfare’ than any other in the OECD, should be even more tightly targeted to low income earners then that’s fine. Just don’t pretend that by doing so you can also call for an adequate payment and one with low barriers to work. Pick any two out of three; you can’t have it all.
Worth reading.

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