Australia Has an Inequality Problem, Says Andrew Leigh

Australia has an inequality problem and needs to give employees more power to help fix flatlining wages, Labor MP Andrew Leigh says.

But Jobs Minister Kelly O’Dwyer has attacked the opposition’s fairness approach and said the best way to reduce inequality was to give someone a job.

O’Dwyer and Leigh discussed their vision for equity and fairness at the 2018 Outlook Conference in Melbourne on Thursday.

Leigh said with real wages flatlining for the past five years despite solid productivity growth, there was need to tilt the power balance a little more towards employees.

“Whether you want to look at income inequality or wealth inequality, whether you want to use tax data or surveys, it is unambiguous that over the past generation inequality has risen,” Leigh said.

Leigh told Pro Bono News he was worried about the rising gap between the rich and poor in Australia and said we must fix the nation’s wage problems.

“Australia hasn’t seen serious real wage growth for the last five years,” he said.

“We’ve had wages barely keeping pace with inflation for the bulk of Australian workers. And so we need to do things like making sure labour hire firms aren’t running rampant cuts to penalty rates, and go about creating a fairer tax system.”

In her speech on Thursday, O’Dwyer said fairness was not compulsory equality for all, or equality of outcomes for all.

“Fairness in Australia has been hijacked as a one word slogan by Labor and The Greens to encapsulate the idea that if someone’s doing well, it must mean someone else is doing badly as a result,” O’Dwyer said.

“These parties believe fairness starts and ends with redistributing from those who have more to those who have less, with no regard to anything else.

“Getting a job is the single most uplifting event that can happen to a person, giving them better financial security, better life choices and the opportunity to plan ahead rather than simply surviving until the next welfare payment.”

Great panel with O’Dwyer and Leigh – both across their briefs and articulate #outlookconf18 @australian https://t.co/HuPNAcAemX pic.twitter.com/4nWezhR4hb

— Richard Ferguson (@RichAFerguson) October 11, 2018

O’Dywer said there were many myths spread about inequality, adding that 27 years of economic growth in Australia had significantly improved living standards for the average Australian household in every income group.

“In a recent speech, the outgoing chairman of the Productivity Commission stated that unlike the North Atlantic nations, the benefits of the income growth since the last recession in the 1990s have been fairly evenly shared across every income group in Australia,” she said.

“The 10 per cent with the least income have done as well, if not slightly better, than most groups.”

Despite this, recent research from the Australian Council of Social Service (ACOSS) suggested inequality in Australia had worsened.

ACOSS’s report found wealth inequality in Australia increased between 2003 to 2015, with the average wealth of the highest 20 per cent rising by 53 per cent after inflation, compared to a nine per cent decline for those those in the lowest 20 per cent.

ACOSS CEO Dr Cassandra Goldie said the report’s findings showed Australia was among the most unequal wealthy nations in the world, along with the US and the UK.                                            

“The Australian experience in recent decades shows that inequality has increased strongly in economic boom times and flattened with a slower economy and slow wage growth across the board,” Goldie said.

“Excessive inequality isn’t inevitable. We can work together to bridge the divide by lifting the lowest social security payments, removing tax loopholes that enable people with the highest incomes to avoid paying their fair share [and] creating a fairer system of pay bargaining.”