This report discusses trends in the way Australian families are forming and re-forming, factors determining families' access to income, and proposals regarding reform of the income transfer system. The current shape of families in Australia is described in terms of a shift to marriage at a later age; leaving-home behavior of young people; the formation of "living-together" relationships among young people; lower fertility; smaller families; a shift in demand for services from the young to the aged; and increasing divorce rates. Levels and distribution of income are reported in relation to families under the poverty line; access of family members to employment; families' experience of unemployment; two-earner families; women's employment; and one-parent families. The discussion of policy strategies for the future delineates priority objectives, advances reform strategies for taxation and social security, and provides a guide to tax and social security reform issues and options for families. (RH)