Extract from The Guardian
Top earners are now pulling in five times as much as those at the
bottom and the wealthiest have 70 times the assets of the poorest, the
Australian Council of Social Service says, as it calls for a stronger
social safety net
Australia’s rich are getting richer, and while inequality here is not
as extreme as in the US or the UK, it is heading in that direction,
according to a new study by the Australian Council of Social Service.
Australians earning in the top 20% of incomes receive five times as much as those in the bottom 20%. A person with accumulated wealth in the top 20% has 70 times as much as a person in the bottom 20%.
And the gap is widening, the study found, with the share of both income and wealth going to the top 20% increasing.
Over the past 17 years, the share of income earned by the top 20% increased by 2.3% a year, compared with 1.8% a year on average for the bottom 20% and by 2% for the middle. By 2012 this meant the incomes of the top 10% were 41% higher than they were in 1995, while the incomes of the bottom 10% were 25% higher.
The wealth of the top 20% increased by 28% from 2004 to 2012, while the wealth of the bottom increased by just 3%. This means the top 20% have increased their share of all wealth by 1.8 percentage points over those eight years, while all other groups lost ground, with the greatest losses for middle wealth households.
This leaves Australia with income inequality higher than the Organisation for Economic Co-operation and Development average, but overall wealth inequality slightly lower.
Whereas the top 10% owns 50% of wealth on average across the OECD, in Australia the top 10% owns 45% of wealth, while the bottom owns 5.1% (compared with the lower 3% across the OECD). But that OECD average is skewed by the US, where the top 10% owns 76% of wealth while the bottom 40% owns less than half a percent.
There were competing forces impacting on income inequality over the 17 years studied – strong jobs growth worked to reduce inequality, but unequal wages growth working to increase it. Over the 25 years to 2010, real wages increased by 50% on average – 14% for those earning in the bottom 10% of incomes and 72% for those in the top 10%.
Acoss will use the study as it lobbies policymakers to retain and strengthen Australia’s social safety net and shun regressive tax changes. The group argued against many “unfair” measures in last year’s budget, but backs the government’s new plan to find savings on the government’s spending on pensions by targeting payments to the neediest retirees.
“International institutions such as the International Monetary Fund, the World Bank and the OECD have all warned nations of the dangers of rising inequality,” said the Acoss chief executive, Cassandra Goldie.
“If left unchecked it risks splintering our social fabric and entrenching social, economic and spatial divisions in our community. We know from overseas that it reduces equality of opportunity, stifles upward mobility between generations, increases social tensions, harms our economy, and reduces economic growth.”
Acoss is also pushing for changes to tax policy, including a reduction in tax breaks for superannuation and negative gearing.
“Another factor tilting the scale towards greater inequality is the increased concentration of wealth in areas where generous tax concessions afford the highest benefits to people on the highest incomes – such as real estate, shares and superannuation,” Goldie said.
“The inconsistent tax treatment of these kinds of savings are distorting the fairness of our tax system, with flow-on implications for economic growth as well as the distribution of wealth. We found that the top 20% of the wealth distribution owns over 80% of wealth in shares and investment in real estate and over 60% of superannuation.”
Acoss will release the research on Monday before its conference highlighting the issue.
Australians earning in the top 20% of incomes receive five times as much as those in the bottom 20%. A person with accumulated wealth in the top 20% has 70 times as much as a person in the bottom 20%.
And the gap is widening, the study found, with the share of both income and wealth going to the top 20% increasing.
Over the past 17 years, the share of income earned by the top 20% increased by 2.3% a year, compared with 1.8% a year on average for the bottom 20% and by 2% for the middle. By 2012 this meant the incomes of the top 10% were 41% higher than they were in 1995, while the incomes of the bottom 10% were 25% higher.
The wealth of the top 20% increased by 28% from 2004 to 2012, while the wealth of the bottom increased by just 3%. This means the top 20% have increased their share of all wealth by 1.8 percentage points over those eight years, while all other groups lost ground, with the greatest losses for middle wealth households.
This leaves Australia with income inequality higher than the Organisation for Economic Co-operation and Development average, but overall wealth inequality slightly lower.
Whereas the top 10% owns 50% of wealth on average across the OECD, in Australia the top 10% owns 45% of wealth, while the bottom owns 5.1% (compared with the lower 3% across the OECD). But that OECD average is skewed by the US, where the top 10% owns 76% of wealth while the bottom 40% owns less than half a percent.
There were competing forces impacting on income inequality over the 17 years studied – strong jobs growth worked to reduce inequality, but unequal wages growth working to increase it. Over the 25 years to 2010, real wages increased by 50% on average – 14% for those earning in the bottom 10% of incomes and 72% for those in the top 10%.
Acoss will use the study as it lobbies policymakers to retain and strengthen Australia’s social safety net and shun regressive tax changes. The group argued against many “unfair” measures in last year’s budget, but backs the government’s new plan to find savings on the government’s spending on pensions by targeting payments to the neediest retirees.
“International institutions such as the International Monetary Fund, the World Bank and the OECD have all warned nations of the dangers of rising inequality,” said the Acoss chief executive, Cassandra Goldie.
“If left unchecked it risks splintering our social fabric and entrenching social, economic and spatial divisions in our community. We know from overseas that it reduces equality of opportunity, stifles upward mobility between generations, increases social tensions, harms our economy, and reduces economic growth.”
Acoss is also pushing for changes to tax policy, including a reduction in tax breaks for superannuation and negative gearing.
“Another factor tilting the scale towards greater inequality is the increased concentration of wealth in areas where generous tax concessions afford the highest benefits to people on the highest incomes – such as real estate, shares and superannuation,” Goldie said.
“The inconsistent tax treatment of these kinds of savings are distorting the fairness of our tax system, with flow-on implications for economic growth as well as the distribution of wealth. We found that the top 20% of the wealth distribution owns over 80% of wealth in shares and investment in real estate and over 60% of superannuation.”
Acoss will release the research on Monday before its conference highlighting the issue.
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