Economics and finance, Government and governance, Social policy | Australia, Asia

30 May 2016

Rising inequality shouldn’t be fodder for short-term political point scoring, writes John Hewson.

One issue that should be much more prominent in this election campaign is inequality. Most parties make a bow in its direction, but all fail to address it adequately.

ALP Assistant Treasurer, Andrew Leigh, has been quoting some alarming statistics on income and wealth distribution. For example, since 1975, wages have risen three times as fast for the top 10 per cent of earners as the bottom 10 per cent. Since 1980, the top 1 per cent share has doubled, and the top 0.1 per cent share has tripled. The richest three Australians own as much wealth as the poorest one million Australians.

Drilling down, the persistent failure to rapidly close the gap between indigenous and other Australians is a national disgrace, and last week the Salvation Army released its National Economic and Social Impact Survey documenting what is referred to as growing and “shameful” levels of poverty.

The Survey of 1600 respondents found that: those with children were living off $14-$16 dollars a day after paying for housing expenses; one in five parents said they could not afford medical treatment for their children; and two in five could not afford regular dental treatment.

More than two-thirds of respondents were in extreme housing stress, spending 62 per cent of their total income on accommodation. One in two respondents reported cutting back on basic necessities, with 43 per cent going without regular meals and one-third pawning belongings to cover living expenses.

They estimated that 2.5 million Australians now live in poverty. It shows the real level of struggle taking place in our ‘lucky country’. Clearly, slogans such as “People First”, “Jobs and Growth”, and claims such as “Universal Access”, ring particularly hollow.

This should not be an area for short-term political point scoring. We desperately need a national, bi-partisan strategy to address inequality, disadvantage and poverty. We should focus on just how far we have slipped since Bob Hawke’s 1987 election commitment that “by 1990 no child will be living in poverty”.

Also, just focus on how much worse the recent Budget, and indeed the Opposition’s response, will make the problem, with further tax cuts to the wealthy, and top-end-of-town corporates, along with cuts to various benefits.

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Of course, both sides are committed to Budget repair, and fundamental to this is ensuring the efficiency and effectiveness of government spending programs, and ensuring value for every taxpayer’s dollar.

However, while the effective targeting of welfare and other benefits is fundamental to ensuring that the money actually goes to those in genuine need, it is also essential to ensure that those funds are adequate to meet those needs.

By any objective assessment, the level of benefits such as Newstart for the unemployed, and the aged pension, are below the poverty line, and should therefore be increased as an essential part of any reform.

The opportunity for affordable housing, as a universal right, especially in Sydney and Melbourne, has mostly evaporated as a result of years of neglect by both State and Federal governments. But this can be fixed mostly by significant land releases, reform of the taxation system, and reform of rental assistance programs.

I have been struck during the campaign by the willingness of both sides of politics to yet again bail out struggling farmers. Those in poverty can only look on with envy that they don’t enjoy such political clout!

One very practical initiative, which can be introduced across all levels of government, is to require an Inequality Impact Statement to accompany all Cabinet policy submissions, new legislation and regulations. This should at least directly concentrate attention on the issue, and work, in time, to minimise the compounding of inequality, conscious or otherwise.

This piece was also published by the Southern Highland News.

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Hewson, J. (2016). The lucky country? Lucky for some - Policy Forum. [online] Policy Forum. Available at: