Lyla Lindsey
Australia prides itself on being 'the land of the fair go', but inequality is a growing issue. While the situation is not as severe as in the US, income and wealth inequality in Australia are trending in the wrong direction. This is particularly true for women, Aboriginal and Torres Strait Islander people, and lower-income households. In 2021, more than 9.6 million people earned below the national median income or had no income at all. The gap between the rich and poor is stark, with the top 20% of earners having almost six times as much income as the bottom 20%.
| Characteristics | Values |
|---|---|
| Income inequality | The top 10% of households by weekly income earn three times more than the middle 20% and six times more than the lowest 20%. |
| Wealth inequality | The average household wealth of Australia's highest 10% grew from $2.8 million to $5.2 million (an 84% increase) over the past 20 years, while the average wealth of the lowest 60% rose from $222,000 to $343,000 (a 55% increase). |
| Wealth distribution | The highest 20% of the wealth scale hold nearly two-thirds of all wealth (64%), while the lowest 60% hold less than a fifth (17%). |
| Income distribution | Income inequality is driven by unequal distribution of earnings, working hours, and hourly wages. Lower-income brackets include people on government support, sole parents, families with a woman as the main breadwinner, and adult migrants from non-English speaking countries. |
| Gini coefficient | Australia's Gini coefficient was 0.606 in 2022-23, down from 0.628 in 2018-19. In 2022, Australia ranked 20th in wealth inequality among 29 OECD countries. |
| Impact of industries | The mining boom led to increased income inequality in mining areas, while the tourism industry's softer conditions post-GFC led to reduced income inequality in tourism-centric regions. |
| Impact of the pandemic | Income inequality declined during the initial pandemic period due to increased government support for lower-income households. However, the gap between the average incomes of Aboriginal and Torres Strait Islander people and the Australian average income widened in 2022. |
| Impact on wellbeing | Inequality impacts overall wellbeing, especially for Aboriginal and Torres Strait Islander people, as it affects cultural identity, community connections, and other quality of life measures. |
| Household debt | There is a positive correlation between income inequality and household debt, with higher income inequality regions tending to have higher household debt. |
| OECD ranking | Australia ranks above Canada but below the US and UK in terms of wealth inequality. |
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What You'll Learn
Income inequality
One way to measure income inequality is by dividing the population into groups based on income or wealth. For example, the population can be divided into quintiles, with the lowest 20% representing the lowest income group and the highest 20% representing the highest income group. The income of the highest 20% can then be compared to that of the lowest 20%. According to statistics, someone in the highest 20% income group in Australia has almost six times as much income as someone in the lowest 20% income group. This disparity in income distribution highlights the income inequality present in the country.
The impact of income inequality is far-reaching. It robs the poorest people of the support they need to improve their lives and their voices often go unheard. Income inequality can also have negative consequences for the economy as a whole. When resources and power are concentrated in the hands of a few, economic growth may be hindered. Additionally, income inequality can lead to social tensions and polarisation, as seen in the United States, where rising inequalities have contributed to social cohesion issues.
While Australia's income inequality is not as severe as in some other countries, such as the United States, there are concerns that it is headed in the wrong direction. Reports indicate that progress on economic, social, and environmental targets has stagnated or reversed. Income inequality in Australia was also impacted by the COVID-19 pandemic. During the initial pandemic period, income inequality declined due to increased government support payments, but the recovery phase saw a rise in income inequality, particularly for lower-income households.
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Wealth inequality
Australia is one of the wealthiest countries in the world, but it also has a significant wealth inequality problem. Wealth inequality refers to the unequal distribution of wealth in a society, and it can have harmful effects on both the economy and people's well-being.
In Australia, there is a stark gap between the wealthy few and the many who struggle to get by with very little. According to one source, someone in the highest 20% of the income scale lives in a household with almost six times as much income as someone in the lowest 20%. This inequality is not just about income, but also about the distribution of wealth, including assets held in the main home, superannuation, shares, investment real estate, and other financial and non-financial assets.
Another factor contributing to wealth inequality in Australia is superannuation policies. Superannuation tax concessions, for example, have been criticized for worsening inequality. Additionally, the share of household wealth held by the highest 10% of households compared to the lowest 60% has been a focus of analysis, with Australia faring better than the OECD average in 2014, according to one report. However, it's important to note that these averages can be skewed by countries with very high wealth inequality, such as the United States.
The consequences of wealth inequality are far-reaching. It can lead to diminished economic growth, as resources and power become concentrated in fewer hands. People experiencing poverty due to inequality face barriers to finding paid work, gaining skills, and accessing basic needs like food, housing, and healthcare. Addressing wealth inequality is crucial for ensuring a fair and prosperous society in Australia.
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Gender inequality
One of the most prominent manifestations of gender inequality in Australia is the gender pay gap. Despite the introduction of the principle of "equal pay for equal work" in 1969, Australian women continue to earn less than men. In 2018, Australia's full-time gender pay gap was 14.6%, with women earning on average A$244.80 per week less than men. This gap varies across states and territories, with Western Australia having the highest at 22.4% and Tasmania the lowest at 9.7%. Additionally, women are more likely to experience poverty in retirement and rely on age pensions compared to men.
Occupational segregation is another significant aspect of gender inequality in Australia. Industries such as construction and mining are predominantly male-dominated, while health care, social assistance, education, and training sectors have a higher representation of women. This segregation contributes to the gender pay gap and limits opportunities for both genders.
Inequality in caring responsibilities is another challenge, with women performing significantly more hours of unpaid care work than men. This imbalance contributes to the gendered dimensions of housing stress and homelessness, as women are more likely to experience rental discrimination and are overrepresented among those seeking specialist homelessness services due to domestic and family violence.
While Australia has legislation such as the Sex Discrimination Act 1984 and the Workplace Gender Equality Act 2012 to address gender inequality, there is still progress to be made. Achieving gender equality in Australia will have social and economic benefits, including increased GDP, decreased poverty, and improved quality of life for all.
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Inequality during the pandemic
Australia's wealth distribution was more equal than the OECD average in 2010, according to a recent OECD report. However, in 2022, Australia had the 20th highest level of wealth inequality among the 29 OECD countries for which data was available.
Inequality in Australia during the pandemic has been a complex issue with varying impacts on different segments of the population. On the one hand, Productivity Commission research has found that several factors helped reduce wealth inequality during the early stages of the pandemic. Government support measures such as JobKeeper and the Coronavirus Supplement allowed some lower-income Australians to save or reduce debt. Additionally, strong house price increases in regional areas contributed to reducing inequality. Furthermore, the gap between the average incomes of First Nations people and the average Australian income narrowed slightly during the pandemic.
However, it is important to note that the reduction in inequality during the pandemic was short-lived for some groups. Once the government support payments ended, the equality gap widened again, and the incomes of low-income households fell. The recovery from the pandemic benefited people at the top of the income distribution who owned businesses, as business income and activity rose. As a result, it is inconclusive whether income inequality in Australia is higher or lower than pre-pandemic levels, and researchers warn that there is no simple answer to the question of how inequality has changed since the start of the pandemic.
Additionally, the pandemic exposed and exacerbated existing inequalities in Australia. For example, the gender pay gap persisted during the pandemic, with men having higher disposable income than women across all income deciles. Furthermore, the pandemic enabled those who were already extremely rich and powerful to exploit the crisis for their own profit, as seen by the doubling of fortunes of Australia's billionaires during the pandemic.
Overall, while there may have been some temporary improvements in inequality during the early stages of the pandemic, the long-term impacts are still uncertain. The pandemic has highlighted the need to address the harmful consequences of excessive inequality and the stark gap between the wealthy few and the many struggling to get by with very little in Australia.
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Inequality in Aboriginal communities
Inequality in Australia is evident in Aboriginal communities, where systemic discrimination and historical injustices have led to significant disparities in various aspects of life.
Health inequalities are prevalent among Aboriginal and Torres Strait Islander people, who experience higher rates of physical and mental health issues. For instance, Aboriginal Victorians have higher rates of self-reported fair or poor health, cancer, depression, anxiety, and asthma. Psychosocial risk factors, such as psychological distress, food insecurity, and financial stress, are more prevalent in this community. Additionally, the loss of cultural identity, spiritual heritage, and connection to the land have contributed to the deep-seated deprivation experienced by Aboriginal communities.
Oral health is another area of inequality, with Aboriginal Australian children experiencing twice the rate of dental caries as non-Aboriginal children. Structural factors, including access to and the cost of dental services, as well as discrimination from service providers, contribute to these disparities. The intergenerational legacy of racism resulting from colonisation continues to impact Aboriginal people, affecting their health and access to equitable social relations.
Economic inequality is also evident, with Aboriginal people facing challenges in employment and income. The removal of Aboriginal children from their families, as seen in the 'stolen generations', has had intergenerational impacts on communities, affecting their ability to secure employment and maintain stable incomes. Absolute material poverty, including a lack of food, water, and shelter, is a reality for many Aboriginal people, and they experience relative poverty, lacking decent standards of living.
To address these inequalities, it is crucial to recognise the ongoing impact of colonisation and implement strategies that are culturally sensitive and address the systemic barriers faced by Aboriginal communities.
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Frequently asked questions
In 2021-22, the average disposable income for women over the age of 15 in Australia was $49,000, compared to $62,000 for men.
Wealth inequality refers to the unequal distribution of wealth in a society. Wealth can be measured through assets held in the main home, superannuation, shares, and other financial assets. In 2022, Australia had the 20th highest level of wealth inequality among the 29 OECD countries for which data was available.
Income inequality refers to the unequal distribution of income across a group of people. In Australia, someone in the highest 20% of the income scale lives in a household with almost six times as much income as someone in the lowest 20%.
The gap between the average incomes of Aboriginal and Torres Strait Islander people and the Australian average income narrowed slightly early in the pandemic before widening in 2022.
While inequality in Australia is not as severe as in countries like the United States, there are concerns about increasing inequality. For example, there has been a decline in the share of wealth held by the bottom 40% of Australians, and rising financial stress among Australians.
