Transfer Issues and Directions for Reform: Australian Transfer Policy in Comparative Perspective

Tax-transfer systems in developed countries balance a range of competing objectives, including poverty alleviation and redistribution to the poor, and protection more broadly against a range of social risks, either through redistribution across the life-cycle or social insurance. In seeking to balance these objectives, governments are concerned to maximise policy effectiveness and to minimise adverse outcomes in relation to incentives to work or save or to form or dissolve families or households, while also guaranteeing the long-term sustainability of the system. This paper provides a background and a framework for considering key transfer policy issues in Australia. The paper places the Australian system of social transfers in an international comparative perspective, identifying the distinctive design features and outcomes of Australian arrangements, as well as the similarities between Australian arrangements and those in other countries. The paper also discusses the distributional profile of Australian transfers compared to those in other OECD countries, and assesses the efficiency and effectiveness of the Australian system in terms of poverty reduction and impacts on income inequality. The paper also discusses interpersonal and intrapersonal redistribution and updates previous comparative analysis of the extent of 'churning' and middle class welfare?(Whiteford, 2006).