Working Australia: What the Government Gives and Takes Away

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Abstract

We develop a number of ‘hypothetical’ families using STINMOD, NATSEM’s model of the Australian tax and transfer system to determine the cash benefits received and personal income taxation paid by such families and their position within the income distribution. From this distribution we can gauge their relative financial position, financial incentives to work and assess the appropriateness of how the government taxes and compensates families.


The paper finds that the financial position of singles and families on the Newstart Allowance is significantly below that of those on Government pensions and that workforce incentives on these allowances are greatly diminished by the loss of government benefits and income taxation.


The research shows that the welfare system in Australia is quite generous for families with children but one where the trade-off between supporting low income families and providing the right incentives to return to work is a difficult policy dilemma.

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