Tuesday, 21 August 2018
Inequality in Australia Report
Tonight I rise to speak on the ACOSS, Australian Council of Social Service, and University of New South Wales report Inequality in Australia2018, which was released last month. This report provides robust, independent and authoritative research that monitors the level, nature and trends in poverty and inequality in Australia. The findings are stark, and I think shocking, showing Australia has a greater degree of inequality than many people in Australia, and certainly this place, think in terms of both income and wealth inequality.
The top one per cent of Australian earners take home as much in a fortnight as the lowest five per cent of earners do in a year. The richest 20 per cent of Australian households own 62 per cent of all wealth while the lowest 50 per cent have just 18. The average household wealth in the highest 20 per cent group is $2.9 million, five times that of the middle 20 per cent and almost 100 times that of the lowest 20 per cent, at $30,000. A person with a household income in the highest 20 per cent of the population has five times the disposable income of the lowest 20 per cent.
At the very top of the wealth pyramid are 3,000 people in a category all of its own, described as the 'ultrarich wealth individuals', those with wealth exceeding $50 million, which is $65 million Australian dollars. Australia has the fifth highest number of people in the world with that amount of wealth, an extraordinary finding given our relatively small population.
ACOSS chief executive officer, Cassandra Goldie, said the report's findings deeply challenge:
… our sense of Australia as an egalitarian country…The Australian experience in recent decades shows that inequality has increased strongly in economic boom times and flattened with a slower economy and slow wage growth across the board.
She goes on to say, 'We should not accept increased inequality as an inevitable by-product of growth.'
Despite income inequality reducing since the global financial crisis, the report warns about:
… freezing Newstart Allowance and family payments while indexing pensions to earnings growth, a long-term trend towards greater inequality in hourly wage rates, and growing inequality in the distribution of wealth, which generally increases inequality in investment income. These underlying trends are likely to reassert themselves and increase inequality once stronger economic growth is restored.
While some income inequality has slowed, this report finds that household wealth has become even more concentrated, thanks in part to the 'generous tax treatment for superannuation and a property boom'. Excessive inequality is unacceptable and harmful to our society and to the economy. In addition to the fundamental injustice of such wealth disparity, when people with low incomes and wealth are left behind they struggle to reach a socially acceptable standard of living and struggle to participate in our society. This causes division in our society and these divisions are exacerbated by the current government's ideology of blame, combined with a punitive approach. As the OECD and the IMF have pointed out in recent years, too much inequality is also bad for the economy. When resources and powers are concentrated in too few hands, or people are too impoverished to participate effectively in the paid workforce or to acquire the skills to do so, economic growth is diminished.
This report once again illustrates the myth and lie of trickle-down economics. This inequality is not inevitable. Changes in tax and transfers and labour market and education policies can and must play a part and a more-effective role in reducing divisions in our community. To put a face to these statistics: most, in other words 60 per cent, of the lowest 20 per cent are in households that rely mainly on social security for their income, of which the largest groups are age pensioners and those on Newstart, which is why it is so essential that Newstart be increased by at least $75 a week.