Middle Class Welfare in Australia: How has the Distribution of Cash Benefits Changed Since the 1980s?

The purpose of this article is to examine trends in 'middle class welfare' in Australia, defined as the extent of cash transfers going to working age families with incomes above the second decile in the distribution of family incomes, net of the income taxes that these families pay. We use nationally representative income survey data for selected years between 1982 and 2007-08. We find that while according to this definition there was an increase in 'middle class welfare' between 1982 and 2007-08, this was relatively modest, and was focused on families not far above the second decile. We conclude that difficulties associated with tighter targeting of mean tested payments in an already tightly targeted system would achieve little in terms of increased efficiency and would likely cause considerable pain.