Australia: Providing social protection to non-standard workers with tax financing

Changes in the nature of work and labour market regulation pose challenges to social protection systems relying on social insurance contributions. In contrast, the Australian system of social protection relies on general government revenue rather than social security contributions. In this system, some of the vulnerabilities of the social insurance state may not be so salient, but other challenges and trade-offs exist. In particular, Australia has been described as a wage-earners welfare state (Castles, 1985), with social protection linked to employment conditions, including relatively high minimum wages, paid sick, care, parental and holiday leave, workers compensation and mandatory occupational pensions. As in social insurance states, changes in the nature of work could potentially undermine these features of the Australian social protection system. A further difference is that the Australian social security system is highly income-tested, with spending being more targeted to the poor than any other OECD country. Administration of income-testing becomes more complicated if patterns of work become irregular or other circumstances, such as multiple job holding become common. This chapter assesses Australian employment and social security policies and institutions to identify strengths and weaknesses of the Australian approach to social security.