All activities of government have an impact on household living standards. Government spending and tax policies affect different households in different ways and thus also influence the distribution of income between households. Those policies more closely associated with the Welfare State are intended to equalise the income distribution through redistribution towards those in more disadvantageous circumstances. Any assessment of the achievements of the Welfare State must, therefore, place great emphasis on the redistributive impact of social programmes and the methods used for their finance. Unfortunately, this aspect of social policy analysis in Australia has been hindered by the absence of reliable estimates of the way in which government benefits and taxes are spread across the population. In March 1987, the Australian Bureau of Statistics (ABS) released an important study which begins to shed light on some aspects of this key question. The study, ‘The Effects of Government Benefits and Taxes on Household Income’ (ABS Catalogue No. 6537.0) presents the results of a study of the effects of government benefits and taxes on the distribution of income of households in 1984. It is based primarily on data collected in the 1984 Household Expenditure Survey, supplemented by relevant data from other sources. In light of the great importance and significance of results from the ABS study, they need to be given the widest possible coverage. There is also a need for the methodological framework from which they were derived to be subjected to a thorough, critical assessment. The Workshop on which this Report is based was organised with these two objectives in mind.