Alternative sources of welfare

Direct transfers from government are not the only forms of institutional support in Australia for people not earning or not fully supported by the market or families. Employers provide paid leave to employees through sick leave, recreational leave, long service leave and, in the public sector, paid parental leave. These are paid at a rate equal to full or half salary. Employers also contribute to compulsory workers compensation, which provides a pool of funds for employees who are unable to work because of accident or illness. Superannuation is another form of provision for retired workers, and in some cases for those with permanent disability. There are two major forms--defined benefit, which provides pensions determined by the employee's final salary; and accumulation, which is funded through the contributions made on an employee's behalf and the earnings on that capital More recently there have been proposals for other forms of support--one promoted by Dr Bruce Chapman is for income contingent loans, the principle underlying the HECS scheme. Another promoted by Professor Peter Dawkins and others in the mid 1990s was an earned income refundable tax credit to support low wage workers with dependent children. The Chifley Research Centre and Mark Latham explored matched savings or nest-egg accounts, for young people and others to facilitate asset building. What are the comparative advantages and disadvantages of these various forms of support? What are the outstanding problems that need addressing at this point in Australia? Which of these models could be usefully applied to such issues? This paper discusses the pros and cons of the existing systems and other proposals in the Australian context, at the present time.