Social security in Australia and New Zealand: Means-tested or just mean?

The social security systems of Australia and New Zealand have traditionally rejected social insurance in favour of a means-tested categorical safety n et approach that provides considerable scope for targeting. The experience of both countries provides many examples of how targeting can be used to co nstrain social security spending, and these have attracted interest in othe r countries keen to contain the growth in their social security budgets. Ho wever, although there are many similarities between the two systems, there are also many differences and these have become greater as targeting has ga thered momentum over the last two decades. This paper analyses how targetin g has been used in each country as a way of illustrating the different appr oaches adopted. Attention is focused on here, the retirement income systems of the two countries illustrate an increasing policy divergence, with the planned Australian transition to a "multi-pillar" approach in contrast to t he constant land continuing) reform of New Zealand superannuation. Househol d data on the pattern of receipt of transfer incomes and their impact on th e distribution of income are then used to explore the impact of targeting s ince the early 1980s. This analysis suggests that, in practice, targeting h as had afar smaller impact on income inequality in both countries than is o ften claimed.