Hostname: page-component-78c5997874-4rdpn Total loading time: 0 Render date: 2024-10-31T23:09:13.676Z Has data issue: false hasContentIssue false

The Welfare Expenditure Debate: ‘Economic Myths of the Left and the Right’ Revisited

Published online by Cambridge University Press:  01 January 2023

Rights & Permissions [Opens in a new window]

Abstract

Core share and HTML view are not available for this content. However, as you have access to this content, a full PDF is available via the ‘Save PDF’ action button.

Just over 20 years ago, Fred Gruen (1982) reviewed debates about the level of welfare expenditure in Australia, noting them as being motivated on the one hand by the view that ‘more is better’, and on the other hand by the view that ‘too much’ is dangerous. Despite Gruen's debunking of many assertions about the Australian welfare state, the debate continues, with arguments on the one hand, that Australian welfare state spending is ‘mean’ compared to other countries, and on the other hand, that Australia has a significant problem of welfare dependency and increasing welfare spending. This paper presents the results of recent OECD studies that provide the most-up-to-date comparative information on the relative performance of Australian welfare arrangements. The paper looks at: (i) the trends in the level of social expenditure in Australia compared to other OECD countries, and explanations for differences across countries; (ii) the level of benefit receipt among people of working age; (iii) the impact of social expenditure on income distribution; and (iv) the relative generosity of benefits and implications for incentives. The paper concludes with a discussion of the policy conclusions that might be drawn from these comparisons.

Type
Research Article
Copyright
Copyright © The Author(s) 2006

Footnotes

*

Organisation for Economic Co-Operation and Development (OECD)

References

Aaron, H. (1992) The Economics and Politics of Pensions: Evaluating the Choices', in Private Pensions and Public Policy, OECD, Paris.Google Scholar
Åberg, R. (1989) ‘Distributive Mechanisms of the Welfare State -A Formal Analysis and an Empirical Application’, European Sociological Review, No. 5:167–82.CrossRefGoogle Scholar
Australian Council of Social Service (2004) Australia's social security system: International comparisons of welfare payments, ACOSS Info 360, August, Sydney.Google Scholar
Australian Insitute of Health and Welfare (2005) Australia's Welfare 2005, AIHW, Canberra.Google Scholar
Adema, W. (2001) Net Social Expenditure, Labour Market and Social Policy Occasional Paper 52, OECD, Paris.Google Scholar
Adema, W., Einerhand, M., Eklind, B., Lotz, J., Pearson, M. (1996) Net Public Social Expenditure, Labour Market and Social Policy Occasional Paper, No. 19, OECD, Paris.Google Scholar
Adema, W., Ladaique, M. (2005) Net Social Expenditure, Labour Market and Social Policy Occasional Paper, forthcoming, OECD, Paris.Google Scholar
Arjona, R., Ladaique, M., Pearson, M. (2002) ‘Social Protection and Growth’, OECD Economic Studies, 35(2): 745.Google Scholar
Barr, N. (1992) ‘Economic Theory and the Welfare State: A Survey and Reinterpretation’, Journal of Economic Literature, 30: 741803.Google Scholar
Barr, N. (1999) ‘Fundamentals of social security analysis', Australian Social Policy, 1999/1: 729.Google Scholar
Barr, N. (2001) The Welfare State as Piggy Bank: Information, Risk, Uncertainty, and the Role of the State, Oxford University Press, Oxford.CrossRefGoogle Scholar
Bremner, K. (2005) ‘Net tax thresholds for Australian families', Economic Roundup, Winter, Department of the Treasury, Canberra.[Online] Available: http://www.Treasury.gov.au.Google Scholar
Castles, F.G. (1992) ‘On Sickness Days and Social Policy’, Australian and New Zealand Journal of Sociology, 28: 2944.CrossRefGoogle Scholar
Förster, M., D'Ercole, M. Mira (2005) ‘Income Distribution and Poverty in OECD Countries in the Second Half of the 1990s', OECD Social, Employment and Migration Working Paper No. 22, OECD, Paris.CrossRefGoogle Scholar
Gruen, F.H. (1982) ‘The Welfare Expenditure Debate: Economic Myths of the Left and the Right’, Economic Record, 58(162): 207223.CrossRefGoogle Scholar
Ingles, D. (1977) ‘International Comparisons of Social Security Expenditure’, Social Security Quarterly, 5(1): 16.Google Scholar
Korpi, W., Palme, J. (1998) ‘The Paradox of Redistribution and the Strategy of Equality: Welfare State Institutions, Inequality and Poverty in the Western Countries.’, American Sociological Review, 63(5): 661–87.CrossRefGoogle Scholar
Lindert, P.H. (2005) Growing Public: Is the Welfare State Mortal or Exportable? American University of Paris, Working Paper No. 25, Paris.Google Scholar
Organisation for Economic Co-operation and Development (1976) Public Expenditure on Income Maintenance Programmes, OECD, Paris.Google Scholar
Organisation for Economic Co-operation and Development (1981) The Welfare State in Crisis, OECD, Paris.Google Scholar
Organisation for Economic Co-operation and Development (1985) Social Expenditure 1960–1990: Problems of growth and control, OECD, Paris.Google Scholar
Organisation for Economic Co-operation and Development (1996) Social Expenditure Statistics of OECD Members Countries, Provisional Version, Labour Market and Social Policy Occasional Papers No. 17, OECD, Paris.Google Scholar
Organisation for Economic Co-operation and Development (1998) Income Distribution and Poverty in Selected OECD Counties, Economics Department Working Paper No. 189, OECD, Paris.Google Scholar
Organisation for Economic Co-operation and Development (2003) Employment Outlook, June, OECD, Paris.Google Scholar
Organisation for Economic Co-operation and Development (2004) Benefits and Wages: OECD Indicators, OECD, Paris.Google Scholar
Organisation for Economic Co-operation and Development 2005, forthcoming, Reconciling Earning and Caring: Social Policies for Working Families, OECD, Paris.Google Scholar
Saunders, P. (2004a) Only 18%? Why ACOSS Is Wrong To Be Complacent About Welfare Dependency, Issue Analysis No. 51, September, Centre for Independent Studies, Sydney.Google Scholar
Saunders, P. (2004b) Australia's Welfare Habit: and how to kick it, Duffy and Snellgrove and Centre for Independent Studies, Sydney.Google Scholar
Saunders, P. (2005a) The $85 Billion Tax/Welfare Churn, Issue Analysis No. 57, April, Centre for Independent Studies, Sydney.Google Scholar
Saunders, P. (2005b) Six Arguments in Favour of Self-Funding, Issue Analysis No. 61, July, Centre for Independent Studies, Sydney.Google Scholar
Schuknecht, L., Tanzi, V. (2005) Reforming Public Expenditure In Industrialised Countries: Are There Trade-Offs? European Central Bank, Working Paper No. 435.Google Scholar
Schut, J.M., Vrooman, J.C., de Beer, P.T. (2001) On Worlds of Welfare, Social and Cultural Planning Office of the Netherlands, The Hague.Google Scholar
Varley, R. (1986) The Government Household Transfer Database, 1960–1984, Department of Economics and Statistics, Working Paper No. 36, OECD, Paris.Google Scholar
Vroman, W., Brusentsev, V. (2005) Unemployment Compensation throughout the World: A Comparative Analysis, W.E Upjohn Institute, Kalamazoo.CrossRefGoogle Scholar
Warby, M., Nahan, M. (1998) From Workfare State to Transfer State: Where We Were and Why We Changed, IPA Backgrounder, Volume 10, No 3. Institute of Public Affairs, Melbourne.Google Scholar
Whiteford, P. (1995) ‘The Use of Replacement Rates in International Comparisons of Benefit Systems', International Social Security Review, 48(2): 330.CrossRefGoogle Scholar
Whiteford, P. (1997) ‘Targeting Welfare: A Comment’, Economic Record, 73(220): 4550.CrossRefGoogle Scholar
Whiteford, P. (1998) ‘Is Australia Particularly Unequal?’ in Smyth, P., Cass, B. (eds), Contesting the Australian Way: States, Markets and Civil Society, Cambridge University Press, Melbourne.Google Scholar
Wicks, J. (2005) The Reality of Income Inequality in Australia, Social Policy Issues Paper 1, St Vincent De Paul Society, [Online] Available: http://www.vinnies.org.au/files/qld.microsoft_word_-_spip1_doc.pdf.Google Scholar