Income Distribution and Social Policy Under a Reformist Government: the Australian experience

Abstract

For most of the past decade, the Australian Government has developed its social policies within the framework of a consensual incomes policy. While this has led to a fall in the real average earnings of Australian workers, until 1990, the employed workforce grew at nearly the fastest rate of all OECD countries, and female labour force participation increased markedly. At the same time, there were constraints on public expenditure, under which eligibility for social security payments was restricted. This was accompanied by targeted increases in benefit levels for low income families with children, as part of an explicit programme to reduce child poverty. These and other policies have been characterised as indicating that the Australian Labor Party has followed economic rationalist policies, similar to those of Conservative governments in the UK and other English-speaking countries. Using a micro-analytic simulation model, this article provides estimates of trends in living standards, poverty and income inequality in Australia between 1983 and 1990, and assesses the extent to which Australia has had a ‘New Right’ government.