Rich and Poor Gap Worsening - Report

Aid agency Oxfam says a new report sheds light on rapidly growing extreme inequality and how it worsens poverty around the world.

The international Not for Profit said the report coincided with Prime Minister Tony Abbott’s preparations to spruik Australia’s G20 agenda at the World Economic Forum in Davos this week.

The Oxfam report, Working for the Few, shows that the wealth of the world is divided in two: almost half going to the richest one per cent; the other half to the remaining 99 per cent.

The report also comes after the Abbott Government announced the details of a 2013-14 budget cut of $650 million to aid.

Oxfam Chief Executive Dr Helen Szoke said that the cuts would affect people living in extreme poverty in a number of regions around the world.

“Targeted and effective aid not only saves, and drastically improves people’s lives, it also helps to create the necessary pre-conditions for sustainable and shared economic growth,” Dr Szoke said.

The Oxfam report said that extreme economic inequality was rapidly increasing in the majority of countries.

“We’ve created a world where the 85 richest people own the wealth of half of the world’s population. It’s staggering that in the 21st Century, half of the world’s population owns no more than a tiny elite whose numbers could all sit comfortably in a single train carriage,” the report said.

“Widening inequality is helping the richest undermine democratic processes and drive policies that promoted their interests at the expense of everyone else.

“In developed and developing countries alike, the lowest tax rates, the best health and education and the opportunity to influence are being given to the rich and their children.

"The impact of extreme inequality is most keenly felt in developing countries where missing out means remaining trapped in the cycle of extreme poverty. But such deep inequality is not inevitable, and it can and must be reversed quickly.”

Oxfam said Working for the Few shows that globally, the richest individuals and companies hide trillions of dollars away from the tax office in a web of tax havens around the world.

“It’s estimated that $21 trillion is held unrecorded and off shore,” Oxfam said.

Oxfam said it was urging Australia and other governments to crack down on tax havens and halt tax avoidance and evasion.  

“Tax avoidance through the use of tax havens leads to developing countries missing out on important revenues to combat poverty and drive economic growth.

“This network of secrecy and low tax rates facilitates the illicit flows of large amounts of capital from the poorest countries. It is estimated that between 2008 and 2010, sub-Saharan Africa lost on average $72 bn dollars this way each year, or more than twice what it received in aid,” the report said.

“As a mining giant, Australia should also follow Canada, the US and the European Parliament in introducing rules that require Australian, mining and energy companies to disclose the payments they make to governments in the countries in which they operate.  This would help stamp out corruption and help people in poor countries get a fair share of their natural resource wealth, which they can use to fund essential services like health and education.

“Tony Abbott is in a prime position to help reduce extreme inequality and poverty globally as Australia prepares to host the leaders of G20 nations this year.”

“Just as Foreign Affairs staff had to do yesterday, we will now go to some of those people we have been supporting and tell them that we can no longer support them, which will be acutely disheartening for them,” Dr Szoke said.

For Oxfam, Dr Szoke said this meant looking at critical work to better prepare communities for disasters such as typhoons and earthquakes in Indonesia, Timor Leste and Bangladesh, and ongoing work to reduce violence against women in Indonesia and PNG.

Dr Szoke said she was also disappointed to see humanitarian and emergencies funding cut by $75.4 million, given the world was facing its worst humanitarian crisis of the 21st century with the Syria conflict.

She said Oxfam was also concerned about the Government’s reference to next year’s aid program as a ‘blank canvas’, given the highly effective projects already making a difference in the lives of poor people that must continue.

“Getting the most impact out of our aid dollars is paramount at Oxfam,” she said.

“Oxfam has learned a great deal about what works in delivering aid, as an organisation that has been working for more than 60 years with poor communities around the world.

“As a long-term partner, Oxfam is pleased to see the Government’s commitment to consult as it continues to build the aid program, and stands ready to work with the Government in the coming weeks and months as it finalises next year’s aid budget.”