Australia's social safety net is becoming less targeted towards households with the lowest financial means, new research by the e61 Institute has found.
The research found that government’s social protection spending is increasingly composed of in-kind transfers, which are often universal, while heavily means-tested cash payments are shrinking.
Between 2000 and 2024, in-kind transfers increased from 1.4% to 3.7% of GDP while income support payments dropped from 7.8% of GDP to 5.3%.
“In-kind transfers such as for education, health care and child care are generally lightly means tested or not means tested at all, since they are motivated by universal rights to have certain needs covered,” said e61 Senior Research Economist Matthew Maltman.
“This is in stark contrast to income support payments such as JobSeeker and Family Tax Benefit which are highly targeted.”
The research found that in-kind transfers benefit the lowest-income Australians twice as much as high-income earners. But they are less progressive than cash transfers which have an equivalent ratio of seven times.
“The recent growth of in-kind transfers has been driven by greater spending on disability - which accounts for around 60% of increased in-kind spending since 2019 - as well as spending on aged care and childcare,” said Mr Maltman.
“The NDIS is progressive, with the lowest-income households three times more likely to have a participant than the highest-income households, but it’s not as progressive as cash payments like JobSeeker.
“Many in-kind benefits, including the NDIS, were created as a universal right and so being well targeted is not their primary goal. But the trade off for universality is the rising fiscal cost putting pressure on Australia’s tax settings.”
The research found the most highly targeted in-kind benefit is social housing, with 60% of benefit going to households in the lowest 20% of incomes and 90% of benefit going to those with the lowest wealth.
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