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Inequality in Australia

Australian society has been renowned for its claim to egalitarian social ethos. A concern with equity, social cohesion and equality of opportunity has been central to the concerns of the Evatt Foundation and, historically, infused the development of the ALP and the policies it has sought to implement.

The Evatt Foundation takes the view that this aspiration to be an egalitarian society should be both nurtured and acted on. This is particularly important at the present time because economic and social inequalities are increasing, creating a disjuncture between egalitarian aspirations and the harsh reality of actually increasing inequalities. Turning this situation around requires urgent and sustained attention.

The Evatt Foundation’s research in recent years has focused particularly on the measurement of inequality of wealth in Australian society. Most people think of economic inequality in terms of income. But wealth is yet more fundamentally important in shaping the distribution of power within the society. It is accumulated assets - whether held as real estate, household items, bank deposits, shares or other financial securities - that determines people’s command over resources. That shapes the economic, social and political influence they can exert. Major inequalities in the distribution of wealth therefore create major inequalities in people’s economic and social opportunities. This is the antithesis of equality of opportunity and an egalitarian society.

The Evatt Foundation’s research shows that the top 10% of households has approximately half of the nation’s household wealth. In other words, half is held by the top 105 and the other half is shared among the 90%. Moreover, the inequality is growing. Its most recent publication on the topic indicates that ‘Australia is being fundamentally restructured along two lines. Wealth inequality is increasing absolutely for the bottom 40% in relation to the rest, and the next 50% relative to the top 10%, diminishing economic power and curbing social opportunities for 90% of households.’

Inequalities like these have adverse societal impacts. There is now a wealth of international research by economists, social and environmental scientists which shows that, other things being equal, countries with higher inequality tend to experience more intense economic, social, ecological and political problems, including:

  • lower economic productivity and greater economic instability

  • poorer health, both mentally and physically, including more obesity

  • lower levels of educational attainment

  • higher incidence of violence

  • higher rates of crime and incarceration

  • more environmental damage and larger ecological footprints

  • less effectively functioning democratic political institutions.

As Australians, we would not wish our county to experience deterioration in these respects, yet that is currently the prospect, driven by the increasing inequalities that are occurring.

Particular groups of people in Australian society experience problems of marginalisation as well as lower average incomes and wealth. The legacy of discrimination from the colonial era is a deeply entrenched problem. Redress of the ongoing disadvantage of Indigenous Australians needs special attention. As a starting point, this requires the implementation of the Uluru Statement for the Heart, so that First Nations peoples have a direct voice on policies for their wellbeing.

More generally, stopping the further growth of inequality among all Australians requires attention to both poverty and wealth. Poverty-alleviation maters, of course, but ameliorative policies targeted only at the lower socio-economic disadvantage do not change the economic dynamics causing inequality to grow. Wealth and inequality are two sides of the same coin.

The Evatt Foundation therefore supports the case for public policies to more actively redress inequality in Australian society. Specifically:

  • current moves by the Coalition government to reduce the progressivity of the income tax scale should be strongly resisted

  • increases in minimum wages and payments to unemployed people should, in general, be supported

  • capital gains taxation should not continue to receive a discount, because there is no reason why tax rates should be lower on these unearned incomes than they are on wages earned from work

  • careful consideration should be given to appropriate forms of taxation of accumulated wealth and wealth transfers

  • consideration also needs to be given to limiting the enormous payments to corporate executives, perhaps by setting a ceiling on the ratios of managerial remuneration to workers’ wage payments.

The Evatt Foundation recognises the electoral risks for the ALP in declaring commitments of this sort. The experience of progressive tax reforms being wilfully misrepresented in the run-up to the last Federal election has important lessons in this respect. Most importantly, it indicates the need for long-term educational and political groundwork to be laid, rather than springing reform ides during an election campaign. Public support needs to be built, not assumed. There are some excellent, experienced analysts of inequality among ALP Federal Parliamentarians - Andrew Leigh and Alicia Payne, among others - who could play key roles in developing the ground for egalitarian reforms.

With these concerns in mind, the Evatt Foundation encourages the ALP to commit to:

  • holding a national summit of inequality and reform in Australian society, comparable to the national economic summit that the Hawke government help after its election in 1983

  • in government, instituting a routine process of ‘equity’ audit for all public policies, thereby creating a more systematic means of targeting policies to redress inequalities. This ‘equity’ audit should apply alongside an ‘environmental/climate change’ audit as a means of monitoring and developing policies for a more equitable and sustainable society.


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