The Guardian, 12 October 2017
Australia is among countries with the highest growth in income inequality in the world over the past 30 years, according to the International Monetary Fund.
Vitor Gaspar, the IMF’s director of fiscal affairs, has told an audience at the launch of the IMF’s latest Fiscal Monitor that Australia’s income inequality growth has been similar to the US, South Africa, India, China, Spain and the UK since the 1980s.
Last month the treasurer, Scott Morrison, said that income inequality was not getting worse in Australia.
Morrison told the Business Council of Australia in late September that Treasury and the Reserve Bank had found, in specific analysis of current wage fundamentals, that Australian wages were growing slowly across most industries in the economy, and most regions of the country, so the slow growth was evenly shared.
However, he would not release the Treasury analysis.
Graph showing inequality by country by the IMF. Illustration: IMF
Gaspar said IMF staff had used the Organisation for Economic Co-operation and Development’s income distribution database, Eurostat, and the World Bank’s Povcalnet data, among other sources, to calculate that income inequality had increased in nearly half of the world’s countries in the past three decades, and Australia had experienced a “large increase” in that time.
“Most people around the world live in countries where inequality has increased,” he said.
The IMF’s latest Fiscal Monitor, released overnight, is dedicated to the global growth in income inequality. It warns that while some inequality is inevitable in a market-based economic system as a result of “differences in talent, effort, and luck”, excessive inequality could “erode social cohesion, lead to political polarisation, and ultimately lower economic growth”.
It also warns that income inequality tends to be “highly correlated” with wealth inequality, inequality of opportunity, and gender inequality……
Earlier this year, the OECD economic survey of Australia in April found “inclusiveness has been eroded” in the past two decades.
“The Gini coefficient has been drifting up and households in upper-income brackets have benefited disproportionally from Australia’s long period of economic growth,” the report said.
“Real incomes for the top quintile of households grew by more than 40% between 2004 and 2014, while those for the lowest quintile only grew by about 25%.”
In July the Reserve Bank governor, Philip Lowe, when asked about his views on inequality at a charity lunch in Sydney, said it had grown “quite a lot” in the 1980s and 1990s and had risen “a little bit” recently, but it was important to make a distinction between income and wealth inequality.
“Wealth inequality has become more pronounced particularly in the last five or six years because there’s been big gains in asset prices,” Lowe said. “So the people who own assets, which are usually wealthy people, have seen their wealth go up.”
He said income inequality had increased slightly in recent years, but wealth inequality was more pronounced because of rising asset prices.
So how do individual regions across Australia fare?
The Guardian on 4 February 2016 published this Australia-wide interactive graphic:
Income Distribution in NSW Northern Rivers Region (based on Australian Taxation Office data for 2012-13)
Byron – top 10% of individuals lodging personal tax forms held 38.5% of total income – Gini coefficient 0.544
Kyogle – top 10% of individuals lodging personal tax forms held 33.9% of total income – Gini coefficient 0.554
Ballina – top 10% of individuals lodging personal tax forms held 33.2% of income – Gini coefficient 0.495
Tweed – top 10% of individuals lodging personal tax forms held 31.7% of total income – Gini coefficient 0.473
Clarence Valley – top 10% of individuals lodging personal tax forms held 31.1% of total income – Gini coefficient 0.493
Lismore – top 10% of individuals lodging personal tax forms held 29.7% of total income – Gini coefficient 0.459
Richmond Valley – top 10% of individuals lodging personal tax forms held 28.1% of total income – Gini coefficient 0.448
* Some low income earners, eg. those receiving Government pensions/allowances or earning below the tax free threshold may not be present in the data, as they may not be required to lodge personal tax forms. [Australian Bureau of Statistics, Estimates of Personal Income for Small Areas, Total Income, 2012-13]
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