How can we fix inequality? The current economic model isn't working

Extract from The Guardian

Opinion

Australian economy

Paul Barratt

It is time to reject the politically charged distinction between ‘lifters’ and ‘leaners’

@phbarratt

Thu 27 Dec 2018 12.00 AEDT Last modified on Thu 27 Dec 2018 17.52 AEDT

‘The community is disengaged and unimpressed by political efforts to ensure fairness — or, more accurately, the lack of effort to do so. A new narrative is needed to drive Australia’s future’ Photograph: Kelly Barnes/AAP

If you are not yet convinced that there is inequality in Australia, you are exceptional. If you do not think it matters, you are also out of step. New survey data shows a strong majority of Australians think our society has become more unequal over the last 10 years and that governments should be doing a better job of fixing the problem.
The data has recently been released, along with a report from Australia21 and the Australia Institute which outlines a path to a fairer future for our country.

Reducing the influence of corporate money in politics, implementing an Australian charter of human rights and changing the way the federal cabinet considers legislation are just a few of the reforms proposed in the report, entitled A Fair Go for All Australians.
These proposals were developed at a high-level roundtable held in Parliament House in Canberra, which brought together leading Australian voices on the issue. It included key social scientists, economists and politicians. Former Labor treasurer Wayne Swan and Greens leader Richard Di Natale attended, among others. Members of the Coalition government declined the invitation.

There was agreement among the diverse group that inequality is increasing significantly in Australia and, without a change in public policy, the problem will continue to worsen. Australia’s social security system is no longer adequate; it imposes unacceptable constraints on the growing numbers of people dealing with the consequences of poverty, unemployment, homelessness and general social disadvantage. Australia’s poor record on closing the gap between Indigenous and other Australians and between men and women is unacceptable. So is the inappropriate influence on policy decisions wielded by the corporate sector and those in the upper percentiles of wealth and income, and the failure of the current political structures to curb that influence.

The roundtable participants repeatedly drew attention to the inadequacy of the current economic model, its dependency on endless growth, its failure to engage with ecological and climate limits, and its assumption that unconstrained markets can respond to the need for the dignity and wellbeing of the whole population.
It comes as no surprise that the community is disengaged and unimpressed by political efforts to ensure fairness – or, more accurately, the lack of effort to do so. A new narrative is needed to drive Australia’s future.
We all deserve basic human rights: food, clothing, shelter, education and modern healthcare. But we should aspire to go way beyond that, to be a genuinely intelligent and inclusive nation guided by an agreed set of national values.
It is time to reject the politically charged distinction between “lifters” and “leaners” that undermines our identity as a people committed to a fair go for all. The overwhelming majority of Australians want to have a job. They want to feel that it is a job that has meaning and they want to do it well. How productive they are depends not only upon how hard they are prepared to work but how well they are trained, how well they are led and managed, and what equipment they are furnished with.

In our wage fixation processes we need to reintroduce the concept of the living wage. We must recognise the benefits of investing in people’s education, vocational training, improved access to healthcare, public housing and a decent living standard for those who find themselves unemployed. Elimination of tax benefits like the capital gains tax discount and uncapped negative gearing against personal income, and an effective assault on multinational avoidance, could provide the wherewithal to tackle the problem.
A Fair Go for All Australians presents evidence that Australian levels of income inequality are the fourth highest of 15 OECD countries (the US, UK and Spain are worse). It also shows that Australian tax revenue as a proportion of GDP is well below the OECD average of 34%, and notes that a number of Scandinavian countries have a tax revenue to GDP ratio of more than 40%.
But importantly, the report also offers real-world, practical policy solutions to the major structural difficulties that people in our society are facing.
Sure, some inequality will always be with us, but we do not have to accept the current model. We can, and must, do better for all Australians. Reducing inequality is good not only for those in the lower-income levels who benefit directly; it makes for a stronger society and economy. We can all feel good about that.

• Paul Barratt is chair of Australia21, an independent public policy thinktank