New analysis by the Australian Council of Social Service and UNSW Sydney has found that Australia is more unequal than many people think.
In partnership with UNSW, ACOSS will today release the findings of its Inequality in Australia 2018 report which highlights stark disparities in income and wealth that, if allowed to continue un-checked, will change the nature of our society.
The Inequality in Australia 2018 Report finds that households in the highest 20% income bracket have five times as much income as those in the lowest 20%, while the top 1% receive as much income in a fortnight as the lowest 5% get in a year.
The Report finds that wealth inequality is even greater, with households in the highest 20% holding almost a hundred times the wealth of the lowest 20% ($2.9 million, compared with $30,000).
At the very top of the wealth pyramid, 3,000 people are in a category Credit Suisse describes as ’’ultra-high wealth individuals’’: those with wealth exceeding $US50 million ($A65 million). Australia has the fifth-highest number of people in the world with that amount of wealth, an extraordinary finding given our relatively small population.
Income inequality increased strongly in the boom years from 2000 to 2008 and then plateaued after the Global Financial Crisis, when overall growth in wages and investment incomes faltered. But wealth inequality grew from 2003 to 2015, led by growth in superannuation assets and investment property which are more concentrated towards richer households than owner-occupied housing.
The Report finds that many high income households wrongly assume they are in the middle, as their incomes are close to ‘average’. In fact, the income of households with two average full-time wage earners ($3,240 total per week, after tax) is well above the average income of households in the middle 20% ($2100).
ACOSS Chief Executive Officer Dr Cassandra Goldie said the report findings are a reminder that Australia is among the most unequal wealthy nations in the world, along with other English speaking countries like the US and UK.
“Our finding that those in the highest 1% earn as much in a fortnight as a those in the lowest 5% in a year deeply challenges our sense of Australia as an egalitarian country”, she 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.” she said. ‘We should not accept increased inequality as an inevitable by-product of growth.”
“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.
“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.”
“Unfortunately, the recently legislated income tax cuts, and a lack of action to lift the lowest social security payments including Newstart Allowance, both take us in the wrong direction on inequality.”
UNSW Research Professor in Social Policy, Peter Saunders, said the level of inequality in Australia will come as a surprise to many.
“While there has been some flattening in income inequality, wealth inequality continued to grow between 2003 and 2015. The average wealth of the highest 20% rose by 53%, while that of the lowest 20% declined by 9%”, he said.
“The report also identifies some significant demographic shifts, with wealth shifting from younger to older households, and older households significantly increasingly their share of all wealth. Between 2003-2015, the wealth of households over 64 years increased by 57% compared with just 22% for households under 35.”
“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.
“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.”