Mitchell, Harding and Gruen (1994) survey the redistributive impact of
Australia's targeted social security system using Luxembourg Income S
tudy delta. They argue that the Australian system has the highest targ
et efficiency among ten countries, but the lowest benefit generosity (
after taking account of tax clawbacks), implying that generosity is gr
eater in universal or contributory systems. This comment identifies me
thodological problems with the accounting framework used by Mitchell,
Harding and Gruen, although also arguing that the Australian targeted
income support system is likely to be more efficient at reducing pover
ty than social insurance systems. An alternative methodological approa
ch is outlined.