Australia welfare system most progressive, OECD expert claims

Australia welfare system most progressive, OECD expert claims

Sidney, Aus. — “Australia operates the most targeted social security system in the OECD, and probably in the world.” Peter Whiteford, welfare analyst at the Organization for Economic Cooperation and Development told the Australian Social Policy Conference that Australia has the most progressive welfare system in the Western world. No other country targets its spending so effectively to the poor of working age. But Whiteford points out it does not encourage employment.

In a paper, The Welfare Expenditure Debate–Economic Myths of the Left and the Right Revisited, Whiteford said that Australia’s total welfare spending is below the Organization for Economic Co-operation and Development average only because its pays out half in pensions as OECD average. In most areas of welfare, including unemployment benefits, Australian spending is about average.

Australia’s welfare system provides benefits to families that are far above the OECD average, and they flow to sole parents and unemployed parents at the bottom. He points out that because welfare is so precisely targeted, and generous that Australia has one of the West’s highest rates of jobless households. In 13 per cent of households with children, no one has a job. For many the difference between a low paid job and a welfare benefit is very small and welfare does not encourage parents to enter employment at the bottom. Australia and Ireland are the only Western countries where half of sole parents have no job. “In a country like Sweden it’s about 70 per cent,” Dr Whiteford said. We’ve got very strong disincentives for families with children to look for work,” Dr Whiteford continued. “Their benefits are not that much below what they got in a job.”

Whiteford advocates policies that require parents to look for work once their children are at school. But rather than moving mothers to lower benefits, he argues that the government should tackle more important barriers to them finding work: the lack of affordable child care and the massive clawback of welfare benefits if they do find work.

While expenditures appear to be rising faster than in other OECD countries, he says this is mostly due to changes of definition. Claims that Australia wastes billions in administrative costs are unfounded, with Australia at the low end of the OECD range.

Australia redistributes almost 4 per cent of its GDP to the poorest 20 per cent of the population, more than Denmark, Norway or Sweden, and the third-largest serving in the OECD. In real terms, sole parents and unemployed parents receive the seventh highest benefits in the OECD.

For Whiteford the imortant question is how to tackle the issue of welfare dependency among parents whose choice is to stay on welfare–low-paid but comfortable–or try to get a job that would be low-paid and insecure, and for which the net benefits go overwhelmingly to the Government,

Whiteford suggests Australia takes one step further: adopt paid parental leave on Scandinavian lines, with job rights protected. New mothers should think of parenthood as a pause in their working life, and not an end to it.

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