A new report from UNSW Sydney researchers and the Australian Council of Social Services (ACOSS) highlights the stark disparities between the haves and have nots in Australia and the impact it could have on society.
The Inequality Report in Australia 2018 report, released Tuesday at UNSW, found that the top 1% of income earners receive more income in a fortnight ($11,682) than the lowest 5% earn in a year. What’s more, wealth disparity is even greater with the average wealth of the top 5% (more than $6 million) more than 200 times that of the lowest 5% ($30,000).
Peter Saunders, professor from the UNSW Social Policy Research Centre and primary investigator on the report, said such excessive gaps could have negative effects on the Australian society and economy.
“When people with low incomes and wealth are left behind, they struggle to reach a socially acceptable standard and to participate in society. This causes divisions in our society,” Professor Saunders said.
The report also identifies significant demographic shifts, with wealth moving from younger to older households, and older households significantly increasing their share of all wealth. Between 2003-2015, the wealth of households over 64 years old increased by 57% compared with just 22% for households under 35.
Professor Saunders added that the Organisation for Economic Co-operation and Development (OECD) and International Monetary Fund (IMF) have pointed out in recent years that too much inequality is also bad for the economy.
“When resources and power are concentrated in too few hands, or people are too impoverished to participate effectively in the paid workforce, or acquire the skills to do so, economic growth is diminished,” he said.
ACOSS Chief Executive Officer Dr Cassandra Goldie said the report underscores Australia’s position among the most unequally wealthy nations in the world, alongside the US and UK.
“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 said. “We should not accept increased inequality as an inevitable by-product of growth."
Dr Goldie and Professor Saunders said the level of inequality across Australia is a result of policy decisions and directions governments have taken in the past two decades. Professor Saunders said the impact of social policy permeates every table in the report: from the setting of social benefits, and the nature of the tax system, to the treatment of home ownership and investments.
“These instruments can be varied by governments to impact on inequality,” he said. “So, from that point of view, the level of inequality that we have is our choice. We can either support the government or put pressure on the government, and we have the instruments we need to change inequality.”
Dr Goldie said inequality will rise further unless governments, business, unions and communities actively work together to change the trend.
“Excessive inequality isn’t inevitable. We can work together to bridge the divide by lifting the lowest social security payments, removing tax loopholes that enable people with the highest incomes to avoid paying their fair share, creating a fairer system of pay bargaining, restraining executive salaries, ensuring education policies support children who struggle at school, and implementing effective strategies to improve housing affordability,” she said.
A copy of the report is available at the Social Policy Research Centre website.