Introductory remarks: The inequality crisis, industry bargaining and the future of the union movement
Raising awareness of the first part of the title of today’s address, ‘the inequality crisis’, has been the main focus of the Evatt Foundation’s activities over recent years. In particular, Evatt has focused on raising consciousness of the unequal ownership of wealth in Australia.
Australia, we often hear, is a wealthy country, but what exactly does this mean? Measured by population, Australia is not a particularly large country, ranking number 53 out of the 233 countries recognised by the United Nations. Of course, the size of the Australian economy ranks considerably higher than this. Measured by GDP, or the total value of all the goods and services that are produced annually in this country, Australia has the world’s 13th largest economy (on an exchange rate basis). While this is an impressive 40 positions higher than our population ranking, the total value is still relatively modest compared with the world’s major economies, amounting to not much more than 10 per cent of the value of the economies of the United States or the European Union.
We can get a better idea of the value of the economy if we make the comparison on a per capita basis and measure the relative purchasing power of the income from GDP. On this basis, Australia’s economy falls to an even more modest 18th position, albeit that this ranking is still an impressive 35 positions higher than our population share.
These measures all go to the value of annual output and income, and so far, you might be thinking, so unremarkable for a country with a developed economy. It’s when we move from measuring the flow of income to tallying the stock of wealth that Australia comes into its own, the accumulated yield of the much touted 26 years of uninterrupted economic growth.
By wealth, I mean the nation’s total net household wealth, which is monitored by the Swiss investment bank, Credit Suisse. On this league table, and I will leave aside the historically and structurally distinct case of China, Australia ranks as the eighth richest country in the world, behind only the United States, Japan, the United Kingdom, Germany, France, Italy and Canada, some 45 positions higher than our population share. This calculation is on an exchange rate basis, which Credit Suisse argues is reasonably accurate with some justification because the wealthy can purchase their goods and services from virtually anywhere in the world.
Credit Suisse doesn’t present a per capita analysis. Rather, to take into account population size, it distributes the wealth on a per adult basis, again with some justification, given that children generally access wealth through their family. On this basis, what is not widely appreciated is that, when the value of net household assets is averaged over the number of adults, Australia ranks as the second wealthiest country on the planet, behind only Switzerland and ahead of the United States and all the other major economies, and now I am including China (by this criteria, average net wealth per adult, China falls to 51st position). To put this in perspective, the second richest country in the world today, it can probably be safely assumed, will also be the second richest country in history.
But as we all know, this extraordinary pile of wealth is not distributed so that all Australia's adults own something around the average. On the contrary, the ownership of the great wealth of this country is dramatically unequal. According to the Evatt Foundation’s calculations published in The Wealth of the Nation, the top 10 per cent of our households own at least half the wealth and the bottom 40 per cent effectively have no share.
On this note, I will introduce our speaker. It seems plain that something is terribly wrong when, after 26 years of continuous economic growth that has resulted in Australian adults becoming the second richest people on earth, nearly half the nation’s households own no assets, and the survival of many or probably most of them depends on the minimum wage for insecure work. For these households, Australia is not a wealthy country, only an increasingly unequal one. To give us her ideas about what has gone wrong and how we might go about fixing it, please welcome the national secretary of United Voice, Jo Schofield.
Remarks by the President of the Evatt Foundation, Christopher Sheil, on introducing the address 'The inequality crisis, industry bargaining and the future of the union movement', presented by Jo Schofield at the Sydney Mechanics’ School of Arts on 18 June 2018.
Sheil, Christopher, 'Is Australia a wealthy country?', Evatt Journal, Vol.17, No. 2, June 2018.<https://evatt.org.au/is-australia-a-wealthy-country>