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Published byCharleen Webb Modified over 9 years ago
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Social Security: A case for reform Julia Perry
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Current payments Pensions Age pension Disability Support Carer Payment Bereavement Allowance Parenting (Single) Widow B (closed) Wife (closed) DVA service pensions for veterans, wives, widows and carers Plus 12 Family Payments Benefits Newstart Sickness Special Parenting (Partnered) Youth Allowance Austudy (anomalous) Abstudy Partner Allowance (closed) Widow Allowance (closed)
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Rates
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Income tests PensionBenefit Single Rate (% of min wage) $154.20 (69.2%) $226.65 (47.1%) Free area$69$31 Taper rate40 cents per dollar of income 50/60 cents per dollar of income
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Principles for social security Community Acceptability Adequacy Equity Maintenance of incentives and encouragement of self provision Administrative feasibility and financial sustainability.
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Adequacy Minimum living standard Percentage of wages? Average or minimum? Comparison with two income family? ‘Basket of goods’ – CPI or low income index, what is in the basket of goods?
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Equity Redistribution of income and wealth – advantaged to disadvantaged Rights of citizens to protection against poverty Equal assistance to those in equal need More assistance to those in greater need Family dependence?
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Incentives to work Activity test Rates below wages Graduated income test withdrawal In-work benefits Enabling programs Eligibility rules
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Problems with existing system Different payments do not form a comprehensive system of support for the needy Inequities between pensions and benefits, benefits are inadequate Work incentives vary unsystematically Enormous complexity Perverse incentives
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Single Payment structure One payment based on low income and wealth Rates would vary according to household circumstances, dependents and special needs Income tests would apply consistently Activity test would be applied
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Conclusion Basic income Guaranteed Minimum Income Conditional Minimum income
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New System Labour force barrier add-on Other add-ons Disability Add-on Housing add-on (private rent and home buyers) Family payment (children) Living alone and sole parent add- ons Base rate Income test Based on individual not couple Income includes imputed income from wealth Threshold $50 a week Taper rate 50% then 40% People in low paid work eligible on basis of income
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