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Urgent Need to Address Inclusive Prosperity - Think Tank


21 July 2015 at 10:15 am
Xavier Smerdon
A new discussion paper on inclusive prosperity by the left-leaning Chifley Research Institute has argued that rising inequality is a threat to Australia’s future growth prospects.

Xavier Smerdon | 21 July 2015 at 10:15 am


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Urgent Need to Address Inclusive Prosperity - Think Tank
21 July 2015 at 10:15 am

A new discussion paper on inclusive prosperity by the left-leaning Chifley Research Institute has argued that rising inequality is a threat to Australia’s future growth prospects.

The Labor Party’s official think-tank discussion paper argues that policies to limit inequality are urgently needed – claiming policies which make inequality worse are neither tough nor necessary but would harm Australia’s future prospects.

It’s the first Discussion Paper by the Chifley Research Centre’s Inclusive Prosperity Commission, headed by former Labor Treasurer, Wayne Swann and Michael Cooney, the Executive Director of the Centre and former speechwriter to Prime Minister Julia Gillard .

“The argument of this paper is very simple: a new level of inequality is emerging in Australia and this is a serious threat to our future economic growth. Our past performance is a strong platform and Australia is one of the few countries to have resisted the trend to a shrinking middle-class up until now, as the IMF has recently observed,” the paper said.

“We must pursue policies designed to limit inequality if we are to achieve wealth creation, job growth and economic growth in a globalized economy characterized by profound technological change.  

“That is the key to inclusive prosperity for Australia in the coming years.”

The report said Income inequality in Australia was rising.

“[We] are now in the bottom half of the equality ladder, those at the top have been taking a greater share of Australia’s income, the gender pay gap is widening, Australians with disadvantage are being left behind, wealth inequality, especially driven by housing, is far worse than income inequality and most worrying, since the mid-2000s, wages have failed to keep pace with productivity improvements,” it said.

“We firmly argue that an emerging squeeze on living standards in ‘middle Australia’ is bad for Australia’s future growth.”

The report also said that for the past 25 years, rising living standards in “middle Australia” have strengthened the economy in a period when run-away inequality and wealth concentration destabilised the US and much of Europe.

“Now threats are emerging at home which could see us repeat that overseas experience” it said.

“The clear signs of a wage ‘decoupling’ or ‘disconnect’ where rising labour productivity is not matched by rising labour income are most troubling.

“If our labour market institutions have weakened unions and workers so much that they can¹t successfully bargain for a return on productivity, this is not just bad for living standards in the short term it is bad for productivity growth in the long term. The widening gender pay gap hits working families particularly hard.

“The widespread public calls for a new consensus for bold productivity-enhancing reform must acknowledge the vital importance of wage growth as an incentive for productivity growth.

“Policies to make industrial relations more ‘flexible’ by further weakening bargaining power of employees would be fundamentally misguided based on this evidence.

“Similarly, business and media elites pushing for economic change must acknowledge the central place of equality to future growth. Policies to make firms more ‘competitive’ by redistributing income and wealth away from middle Australia through badly targeted changes to the mix of consumption, income and asset taxes would be a disastrous step down the discredited American road.”

The discussion paper has been released on the eve of the National Conference of the ALP.


Xavier Smerdon  |  Journalist  |  @XavierSmerdon

Xavier Smerdon is a journalist specialising in the Not for Profit sector. He writes breaking and investigative news articles.

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