Policy and demographics are changing the character of Australia’s social safety net. Cash transfers like JobSeeker and Family Tax Benefit are shrinking. Meanwhile, ‘in-kind’ transfers like government-subsidised education, disability and health care are increasing quickly. This paper uses survey microdata to detail how rising in-kind transfers are changing who receives government support.

Policymakers face a trade-off between universality – or the degree of targeting where it exists – and the rising fiscal cost of in-kind transfers which is putting pressure on Australia’s tax settings. 

Key findings

• In-kind transfers are typically progressive. The lowest-income Australians receive 2 times more than the highest income Australians. But they are less progressive than cash transfers which have an equivalent ratio of 7 times.
• There are substantial differences in progressivity by the type of in-kind transfer. Social housing is very progressive because it is a rare in-kind transfer with tight targeting on income and wealth. A contrasting example is child care subsidies, which are delivered roughly equally across the income distribution.
• The National Disability Insurance Scheme (NDIS) – Australia’s fastest growing social protection program – is progressive, with the lowest-income households 3 times more likely to have a participant than the highest-income households.