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Egalitarianism under threat

By Andrew Leigh - posted Thursday, 24 April 2014

Egalitarianism goes deep in the Australian character. Most of us don't like tipping, and passengers tend to sit in the front seat of the taxi. There aren't private areas on our beaches, and audiences don't stand when the prime minister enters the room. We're a country that happily dispensed with knighthoods decades ago, and no sensible person would suggest that the land of 'mate' should become the kingdom of 'sir'.

And yet that egalitarian ethos is increasingly under threat from a rise in inequality over the past generation.

In Battlers and Billionaires, I found that since 1975, real wages for the bottom tenth have risen 15 per cent, while wages for the top tenth have risen 59 per cent.


Cumulatively, the increase in inequality over the past three decades represents a $365 billion shift from the bottom 99 per cent to the top 1 per cent.

It's not just income that has become more unequal. By my estimate, the richest 50 people in Australia have more wealth than the bottom 2 million. The richest 3 people in Australia have more wealth than the bottom 1 million.

Rising inequality is not an inevitable feature of economic growth. Indeed, from the 1920s to the 1970s, Australia became more equal.

The more unequal the society, the less likely it is that a poor child will make it into the middle class: a relationship that has been described as 'the Great Gatsby curve'.

Most Australians are worried about inequality. When asked their views about wealth distribution, the vast majority have a preference for a more egalitarian society than we have today.

And yet I am concerned that the Abbott Government's policies may leave Australia a more unequal country.


The Coalition has announced that it will abolish three payments that are targeted at low-income and middle-income families: the income support bonus, the SchoolKids bonus, and the Low-Income Superannuation Contribution.

The wealthiest Australians benefited disproportionately from the Coalition's decision last December to abandon 55 tax measures. For example, the Coalition has decided to maintain extremely generous tax concessions to people with more than $2 million in superannuation, despite the fact that these retirees receive more government assistance than someone on the full pension.

As though it wasn't enough to cut benefits for the most disadvantaged and cut taxes for the most affluent, the Abbott Government has gone one step further, by proposing to transform Australia's flat-rate paid parental leave scheme into a wage replacement scheme.

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This article was first published in The Australian on April 21, 2014.

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About the Author

Andrew Leigh is the member for Fraser (ACT). Prior to his election in 2010, he was a professor in the Research School of Economics at the Australian National University, and has previously worked as associate to Justice Michael Kirby of the High Court of Australia, a lawyer for Clifford Chance (London), and a researcher for the Progressive Policy Institute (Washington DC). He holds a PhD from Harvard University and has published three books and over 50 journal articles. His books include Disconnected (2010), Battlers and Billionaires (2013) and The Economics of Just About Everything (2014).

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