Wealth and income inequality detrimental to the Australian society
A new analysis by ACOSS and UNSW Sydney has found that Australia is more unequal than people think
A new analysis of income and wealth has highlighted the disparities that may change the nature of society if left un-checked.
Households in the highest 20 per cent income bracket have been found to have five times the income than those in the lowest 20 per cent and almost a hundred times the wealth separates the higher and lower income classes.
Australian Council of Social Service (ACOSS) CEO, Dr Cassandra Goldie, said the report findings are a stark reminder that Australia is among the most unequal wealthy nations in the world, along with the UK and the US.
“Our findings that those in the highest one per cent earn as much in a fortnight as those in the lowest five per cent in a year deeply challenges our sense of Australia as a egalitarian country,” Goldie said.
“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. We should not accept increased inequality as an inevitable by-product of growth.”
ACOSS released the report in conjunction with UNSW Sydney and found that Australia is much more unequal than people think.
Three thousand people at the top of the wealth period are described as “ultra-high wealth individuals”, having wealth exceeding $65 million. Australia has the fifth-highest number of people in the world with that amount of wealth.
UNSW Research Professor in Social Policy, Peter Saunders, said: “Excessive inequality is unacceptable and harmful to society and to the 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. As the OECD and IMF have pointed out in recent years, too much inequality is also bad for the economy.”
As income inequality increased strongly between 2000 and 2008, wealth inequality grew from 2003 to 2015, led by growth in the superannuation assets and investment property, which are concentrated to richer households.
“When resources and power are concentrated in too few hands, or people are too impoverished to participate to participate effectively in the paid workforce, or acquire the skills to do so, economic growth is diminished,” Saunders said.
Saunders added that there were findings of significant demographic shifts with wealth shifting from younger to older households. Between 2003 and 2015, the wealth of households over 65 years increased by 57 per cent compared with just 22 per cent for households under the age of 35.
“Excessive inequality isn’t inevitable,” Goldie said. “We can work together to bridge the divide by lifting the lowest social security payments, removing tax loopholes that enable people with the highest income 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.”
The report also found that many high income households have wrongly assumed that they are in the middle, as their income is closer to ‘average’. The income of households with two average full-time wage earners is well above the average income of households in the middle 20 per cent.
“Unfortunately, the heavy concentration of investment income in high income households, and long-term growth in inequality of hourly wage rates means that, once income growth is restored, we can expect inequality to rise further unless governments, business, unions and communities actively work together to prevent this,” Goldie said.