17 December 2020
A new report by ACOSS and UNSW Sydney shows that, pre-COVID, single people on JobSeeker, even those with some paid work, and single parents on JobSeeker, have been struggling on the lowest rung of the household income scale. Over half are in the lowest 10% of incomes nationally. Half of people on age pensions are in the lowest 20% of incomes nationally, though widespread home ownership among this group provides a significant degree of protection from poverty. The 10% of older people who rent their homes are in a much more financially distressed position.
The report – Inequality in Australia 2020: Part 2, Who is Affected and Why – sets a base-line of data against which to assess the impact that COVID-19 is having on inequality in Australia. It reveals where different groups fit in the income and wealth scales, and the direct causes of inequality from the latest data available, 2017-18.
Professor Carla Treloar, Director of the Social Policy Research Centre, UNSW Sydney, said:
“Even before the COVID recession, the highest 20% of households, with average after-tax incomes of $4,166 per week, had almost 6 times the income of the lowest 20%, with $753 per week. When it comes to wealth, inequality is even more stark: the highest 20%, with average wealth of $3.3 million, have 90 times the wealth of the lowest 20%, with just $36,000 on average.
“While we like to think of Australia as the land of a fair go, the reality is that Australia has significant levels of inequality, especially wealth inequality. The latest evidence from other research indicates that the Jobkeeper and Jobseeker Payments actually reduced overall income inequality despite the recession, but as these payments are wound back, the harsh effects of high unemployment and low income support payments for those affected and reductions in paid working hours will be revealed.
“While the number of part-time jobs has recovered to its pre-COVID level, so far only one third of fulltime positions have been restored. This will exacerbate income inequality as government income supports are wound back,” Professor Treloar said.
Australian Council of Social Service CEO Dr Cassandra Goldie said:
“The report shows inequality was stark in Australia even before this year, when we have experienced the deepest recession since the 1930s. While the Government did increase income support at the beginning of the crisis, which greatly reduced poverty for a time, it is now threatening to cut income support back to the brutal old Newstart rate.
“People on JobSeeker, including single parents, are now being seriously left behind in the economic recovery, especially with the Government cutting back income support at Christmas time to just $50 a day and threatening to go back to the old, brutal Newstart rate of $40 a day in March.
“We know that unpaid caring work increased during lock downs, especially for women, and this report reveals the impact of unpaid caring work on inequality pre-COVID, with those without full-time work more likely to be in lower income levels.
‘’The prospect that high levels of wealth inequality may become entrenched after the pandemic is also concerning, as high income-earners save more of their income and investment returns and house prices pick up again, ahead of growth in wages,” Dr Goldie said.
The report found:
- The highest 10% of households by wealth owns almost half (46%) of all household wealth, followed by the “middle wealth group” (those in the 60th – 90th wealth percentile) with 38%, leaving the lowest 60% – who are younger and poorer – with just 16% of all wealth. Wealth in the form of shares and other financial investments and investment property is especially skewed towards the highest 10%, who hold two thirds of these assets, including investment property averaging $802,000 in value and shares, business & financial investments worth an average of $1,441,000.
- The Retirement Income Review revealed that the average value of inheritances received by people in the highest 20% by wealth was around $180,000 – twice that of the middle 20% and four times the lowest 20%. Overall superannuation death benefits are projected to rise from $17 billion in 2019 to $130 billion in 2059, in large part due to lax draw-down requirements and excessively generous exemption from tax of the earnings of super funds after a member retires.
Read the report at: https://bit.ly/Inequality2020Part2