The Australian welfare state

Australia possesses one of the most selective income support systems in the Western industrialised world. Financial assistance is provided on a flat rate basis, funded from general taxation revenue rather than via contributions from workers and employers. In contrast to many European welfare states, Australia did not introduce social insurance schemes whereby those who experience unemployment or sickness are protected by income replacement packages. Rather, its welfare payments are mostly means tested, targeted to the poor, and low in monetary value (Whiteford, 2010).

Early historians depicted Australia as a ‘working man's paradise’ in which disparities of wealth were far less prevalent than in the old world. Motivated by the philosophical concept of a ‘fair go’, Australian governments introduced legislation in the early 20th century both to protect the rights and conditions of workers, and to provide direct payments to older and people with disabilities (Mendes, 2008).

This unique welfare state model was called a ‘wage earners welfare state’ because it concerned itself primarily with protecting wage levels (at least for white male breadwinners) rather than providing supplementary welfare benefits. The Australian model contrasted with the residual model of welfare because Australia had a minimum living wage, and with the institutional model of welfare because full inclusion in the system depended on one's status as a wage earner rather than as a citizen (Castles, 1985, pp 102-3).

The Australian welfare state has been described as a residual or liberal welfare state that is typified by low levels of welfare spending, and minimum interference with the free market (Esping-Andersen, 1990). Assistance is mainly targeted via means-tested payments to poor and disadvantaged people, rather than being provided universally to all citizens. A more recent analysis using a range of welfare state characteristics from 1973-2007 constructs Australia as ‘one of the least generous welfare states in the OECD [Organisation of Economic Cooperation and Development]’ (Starke et al, 2014, pp 234). Its public social expenditure as a percentage of GDP in 2012 was 18.3%, leaving Australian ranked 25th out of 34 in the OECD, and below the OECD average of 21.4 (OECD, 2014).

However, an alternative point of view contests the assumed link between greater social expenditure and income redistribution.