Henry Williams is the Director of Policy at a new Melbourne-based think tank called Policy Institute Australia. They have done detailed analysis of how to tweak Australia’s welfare system to provide for those in need, rather than giving away billions to high-wealth households. It is all in their report called “Home truths: The case for rebalancing toward better means testing”. Here’s a revealing example from the report that illustrates some of the concerning realities of how Australia’s welfare system operates: …a retired couple with a $5 million home in Sydney can qualify for the full Age Pension worth almost $50,000 a year, and up to $150,000 for one spouse in Aged Care. Their neighbours who rent a modest home and hold $1.5 million in super receive no pension at all and roughly half the Aged Care support. This seems unfair—at least according to my internal moral compass. Here is another example from the report …[a] family with two kids earning $400,000 a year qualifying for up to $20,583 in Child Care Subsidy support and about $20,000 in Parental Leave Pay… I think some listeners would be surprised by these welfare settings. In my imagination, these subsidies and welfare payments go to those in need, not wealthy and high-income households. In the interview, we get quite nerdy discussing how relatively minor tweaks to just four parts of the welfare system—the Age Pension, Aged Care, the Child Care Subsidy, and Parental Leave Pay—which now cost over $126 billion per year, could save $21 billion per year. And it would all be achieved in what I perceive as a very fair way, by targeting what amounts to upper-class welfare. Here’s Policy Institute Australia’s website, and here’s the report. *Note that we didn’t cover the more radical policy shift of making cash payments universal and letting the tax system do the means testing. Timestamps 0:00 Introduction4:01 A family with a $400,000 annual income gets $20,000 of benefits5:58 What does some of the jargon mean12:07 The scale of the payments15:30 Age pension reforms28:00 Age care payments39:08 What about welfare for younger people and families44:59 Is it good to pay people for babies56:04 How big are the budgetary savings Put Fresh Economic Thinking to work Why a paid subscription matters A paid subscriber to FET wants intellectual challenge. They don’t want someone to write what they already think. They want insights that are hard to get elsewhere and a public debate that is intellectually honest, not tribal. Subscribing is a vote for independence — you're saying I want Cameron Murray to have the financial freedom to investigate things that other economists won’t investigate. If that sounds like you, and you get value from the research and analysis published here, I’d appreciate your financial support. A fresh economic consultancy Most economic consultancies begin with the conclusion a client wants. They sell institutional credibility and a report. I sell economic thinking. If your organisation has a difficult economic question, a policy argument that needs testing, or a problem where you want to get beyond the usual consultant consensus, I’d like to hear from you. FET also provides custom economics training, presentations and workshops for organisations that want their people to understand the economics behind the issues they work on. If there are economic concepts, debates, or blind spots your team needs a genuine handle on, then please reach out. Ground Rules: Land and Housing Economics for Professionals Put that professional development budget to work with an upcoming FET Land and Housing Economics workshop in Sydney or Melbourne. This two-day workshop is crafted for smart researchers, policy analysts, economists and planners who want to truly understand how land and housing markets work. Sydney tickets here. Melbourne tickets here More details here. As always, please like, share, comment, and subscribe. Thanks for your support. You can find Fresh Economic Thinking on YouTube, Spotify, and Apple Podcasts. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.fresheconomicthinking.com/subscribe
