The Australian welfare state
We live in a welfare state. The Australian government spent $71.6 billion in 2006/07 on income support (6.8% of GDP), and 27% of the over-15 population receive income support. Big numbers. But what got my attention in the Harmer Review of Pensions was the number of different welfare programs…
Age Pension, Disability Support Pension, Carer Payment, Bereavement Allowance, Newstart Allowance (the “dole”), Sickness Allowance, Parenting Payment, Widow Allowance, Youth Allowance, Austudy Payment, ABSTUDY, Special Benefit, Service Pension, Partner Service Pension, War Widow’s & Orphan’s Pension, Income Support Supplement, Family Tax Benefit (A), Family Tax Benefit (B), Baby Bonus, Double Orphan Pension, Maternity Immunisation Allowance, Child Care Benefit, Child Care Tax Rebate, Rent Assistance, Pharmaceutical Allowance, Remote Area Allowance, Telephone Allowance, Utilities Allowance, Seniors Concession Allowance, Pensioner Education Supplement, Education Entry Payment, Work for the Dole supplement, Language, Literacy and Numeracy Supplement, Pension Bonus Scheme, Pension Bonus Bereavement Payment, Crisis Payment, Mobility Allowance, Carer Allowance, Carer Bonus, Seniors Bonus, Pensioner Concession Card, Low-income Health Care Card, and Commonwealth Seniors Health Card.
And some people are still on discontinued programs, including Mature Age Allowance, Partner Allowance, Widow B Pension, Wife Pension (Age), and Wife Pension (Disability Support Pension). Not to mention tax expenditures.
The eligibility criteria and the phase-out of payments vary across the schemes, creating a mess of complex schemes, offsets and withdrawal rates which effectively mean that no normal human could ever be across the full welfare system, and no decent reform will ever be able to get past the entrenched interest groups.
PML on tax reform
The following guest post is by regular ALS reader P.M.Lawrence.
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I have now put a second submission into the Henry Tax Review, for the main part. In the faint hope of constructive criticism, here is the body of this one with my contact details removed and with links to the sources for the appendices:-
Submission to the Henry Tax Review
P.M.Lawrence
Incentives to increase employment and GDP that operate through the tax system, and scope for simplifying the revenue base and reducing its incidental burdens.
Summary
Recommendations (1a.), (1b.) and (1c.) cover a Pigovian virtual wage subsidy integrated with the tax system, to improve both employment and GDP without the problems usual with wage subsidies, Negative Income Tax, etc.
Recommendation (2.) covers reducing incidental effects of GST on investment.
Recommendation (3.) covers a lower compliance alternative GST approach, suitable for certain businesses.
Recommendation (4.) covers a lower compliance and more globally competitive alternative corporate tax approach.
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