RESUMO
During the early stages of the COVID‐19 pandemic in 2020 the Australian federal government temporarily expanded the level of cash relief available to the working‐age population through supplemental benefit payments, a wage subsidy and allowing lump sum withdrawals from private pensions. Here we examine the scope and direct distributional consequences of these measures. Two in five working‐age Australians received at least one of these three forms of transfer over a 12‐month window. The median recipient had close to half their pre‐COVID‐19 income ‘replaced' by transfers. The programs interacted to create a two‐tier welfare safety net that put in place a poverty‐alleviating income floor for workers in low‐earning occupations and those on unemployment benefits, and provided job certainty and greater direct income support to those with higher incomes. Aggregate weekly incomes were higher during the initial period of COVID‐19 than they were pre‐COVID‐19. Descriptive exercises, such as this, do not provide information about the ‘impact' of pandemic policies and are limited to what they directly measure. That noted, we raise an important question for decision‐makers facing future shocks: at what point is there ‘too much of a good thing' with crisis cash transfers?
RESUMO
The economic shock and government response to COVID-19 highlight weaknesses in Australia's tax system. COVID-19 puts pressure on a system under strain from long-term structural forces and the tax-free and tax-reduced status of certain sources of income. Returning to a sound structural budget position cannot be accomplished through passive action that relies on 'natural' revenue growth from current tax sources. Discussions should focus on comprehensive reform. Reducing reliance on income (particularly labour) taxes and applying a more equal tax treatment to different individuals and income sources over time are priorities which will support improved well-being and labour market activity.