How can we reduce inequality across Australian society?
What’s the problem?
Inequality is everyone’s concern. Excessive inequality is harmful to our society, our economy and our democracy. It limits the ability of people to participate in social and economic opportunities, and it undermines social cohesion.
This is already playing out in our society. The 2015 Scanlon Foundation national survey registered decline in social justice and equity, one of the five domains of social cohesion. It has fallen from a score of 98 in 2013 to 90.6 in 2015. The decline reflects heightened concern over lack of support for those on low incomes, the gap between rich and poor, lessened economic opportunity, and low trust in government.
In the past, policies and systems for full employment, universal access to public education, wage regulation, progressive income taxes, and social security all helped to limit inequality. Today, the benefits of economic growth are not shared a evenly as they once were. While not as extreme as inequality in the United Kingdom or the United States, there is a growing gap in incomes and wealth for different groups in Australian society. Over the last 20 years the share of income going to those at the top has risen, while the share flowing to those in the middle and at the bottom has declined. The same is true for wealth, with the bottom and middle having lost ground to those at the top. Unless action is taken, the trend towards greater inequality will continue and worsen.
Seven things you need to know
According to ACOSS and their report on inequality in Australia:
A person in the top 20% income group receives around five times as much income as a person in the bottom 20%.
While it is true that over the 25 years to 2010 real wages have increased by 50% on average, wages only grew by 14% for those in the bottom 10% compared with 72% for those in the top 10%.
Income is not evenly distributed across the states and territories. For example, people in Tasmania are more likely to be in bottom 20%, whereas people in Western Australia are more likely to be in top 20%.
There is an urban and regional pattern to income inequality, with people in capital cities more likely to be in the top 20%, while those outside capital cities are more likely to be in the bottom 20%.
Wealth is far more unequally distributed than income. Wealth in Australia is highly concentrated. The top 10% of wealth holders in Australia own 45% of all wealth. The bottom 40% of households own just 5% of all wealth.
The top 20% of the wealth distribution owns 80% of all wealth in investment properties and shares and 60% of all superannuation wealth.
The average wealth of a person in the top 20% increased by 28% over the past 8 years, while for the bottom 20% it increased by only 3%.