Inequality A Policy Decision - Think Tank Report
Tuesday, 8th July 2014 at 11:58 am
The latest research from The Australia Institute reveals how inequality between those with the most and those with the least is rising in Australia, with the richest seven individuals holding more wealth than 1.73 million households in the bottom 20 per cent.
The report, Income and wealth inequality in Australia, says Australia is one of the wealthiest countries in the world, but there are many people who are falling behind.
And the report authors, David Richardson and Richard Denniss claim the nature and extent of inequality is the choice of policy makers.
“We have the capacity to either reduce inequality or to exacerbate it. Successive governments have done little to reduce inequality and have unwound both welfare provisions and the progressive nature of our tax system. Tackling inequality is a political choice, not an economic problem,” the authors said.
The Australia Institute is an independent public policy think tank based in Canberra. It is funded by donations from philanthropic trusts and individuals and commissioned research.
The latest report points to the minimum wage and unemployment benefits which it says have failed to keep pace with the rise in average earnings, resulting in a divergence between low-income earners and the average employed Australian.
“A divergence has also occurred between the average Australian and those at the top. Senior executive pay is now 150 times greater than average weekly earnings,” the authors said.
“While income distribution is unequal, the distribution of wealth is even more so.
“The top 20 per cent of people have five times more income than the bottom 20 per cent, and hold 71 times more wealth.
“Perhaps the gap between those with the most and those with the least is most starkly highlighted by the fact that the richest seven individuals in Australia hold more wealth than 1.73 million households in the bottom 20 per cent.
“This paper provides clear evidence that the tax-and-transfer system has the capacity to redistribute income effectively to reduce inequality.
“Despite consistent public support for reducing inequality, the government is currently seeking to reduce income support. In fact, in recent months the Abbott government has begun to argue that inequality is not just unavoidable, but also beneficial.
“Rather than use the welfare system to redistribute income, the government is seeking to ensure that welfare payments grow at a significantly slower rate than wages. The result will inevitably be an even bigger gap between those with the most and those with the least,” the authors said.