IMPORTANCE OF GOVERNMENT ASSISTANCE


The government provides two types of assistance to individuals and families in Australia. Firstly, it provides cash support in government pensions and allowances, such as the age pension and family tax benefit. Secondly, it provides goods and services free or at subsidised prices (such as health and education services). Such goods and services are collectively called social transfers in kind (STIK). Through means testing, much of this government assistance is targeted to those most in need of financial support.

In 2013-14, older low income households were more reliant on government pensions and allowances than younger households. Three-quarters (74%) of people in older low income households received at least 90% of their cash income from government payments (mainly age pensions), compared with 36% of younger low income households (Graph 1).

Almost one-third (28%) of people in younger low income households received less than 20% of their gross household income from government payments, compared with 5% of people in older low income households.



The amount of government support provided to low income households varies between households, with characteristics such as life cycle stage, household size, and income, influencing the amount of government support provided.

Of people in low income households, those in older households received the highest average weekly amounts of total equivalised social assistance benefits ($744), comprising $377 in cash benefits and $367 from social transfers in kind. The latter were mainly from government provision of health ($273) and community welfare services ($76).

Low income one parent families with dependent children received the second highest levels of government support (averaging $699 per week). Health ($216) and education ($89) services were the highest average weekly social transfers in kind received by these households (Graph 2).




In 2013-14, government assistance increased the average equivalised household income of older low income households from $233 to $982 per week. Low income one parent families with dependent children had the lowest average equivalised income from non-government sources, but government support, in cash and in-kind, increased their equivalised household income to an average of $842 per week (Graph 3).




The impact of including social transfers in kind in household income can also be shown by comparing the composition of low income households determined using broader income measures. In 2013-14, when social transfers in kind are included in the income measure, the proportion of the low income population living in households 65 years and over, fell to 15%, while younger households comprised 85% of the low income population (Table 1).

Table 1. PEOPLE IN LOW INCOME HOUSEHOLDS, Before and after including imputed rent and STIK, 2013-14 Age of household reference person Equivalised disposable household income Equivalised disposable household income (incl. net imputed rent) Equivalised disposable household income (incl. net imputed rent and STIK) PROPORTION OF PERSONS IN HOUSEHOLDS (%) Under 65 years 65 years and over Total low income households 69 31 100 81 19 100 85 15 100

Source: ABS Survey of Income and Housing