Improving work incentives in a means-tested welfare system: The 1994 Australian social security reforms

<p>Shortly after its re-election in March 1993, the Australian government established an expert committee to advise it on how best to respond to the unemployment crisis. Between May 1990 and May 1993, the total number of unemployed people in Australia rose from 549,000 to 924,000. Over the same period, the number of long- term unemployed people (defined as those out of work for a year or more) trebled, rising from 121,000 to 362,000. The deteriorating unemployment situation seemed worse when set against Australia's impressive employment achievement over the 1980s (Saunders, 1994) and was more severe than that experienced by most other OECD countries in the early 1990s (OECD, 1994).</p>