Trends in Income Inequality in Australia

As late as 1967, prime minister Harold Holt could say that he knew of no other free country where “what is produced by the community is more fairly and evenly distributed among the community” than it was in Australia.

From the 1980s onwards, however, this view of Australia came under increasing scrutiny, particularly as more comprehensive data became available. Public and political concerns about inequalities in income have grown further in recent years, particularly since the Global Financial Crisis in 2008, and with the rise of the Occupy Movement in 2011.

In a 2013 speech sponsored by the Center for American Progress, former President Obama described rising income inequality as the "defining challenge of our time." In 2014 the English translation of Thomas Piketty’s Capital in the Twenty- First Century, reached Number 1 on both the New York Times non-fiction list and on Amazon. International organisation such as the IMF and the OECD have also undertaken an increasing volume of research on economic inequality and its causes, as well as possible policy responses.

There has also been increasing attention paid to inequality within Australia, with studies being conducted by the Treasury as well as by the Productivity Commission. In December 2014, the Australian Senate Standing Committees on Community Affairs released its Report on The Extent of Inequality in Australia, which recommended a wide range of policy changes to deal with increasing inequality.

A particular aspect of inequality that underlies some of this debate is whether lower income groups have been “left behind” by a more unequal income distribution. By definition, income disparities increase when high income groups have a higher rate of income growth than low income groups. Most of the common measures of inequality will stay the same if the incomes of all income groups increase at the same rate, while for income inequality to fall