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My interview Razor Sharp 18 February
Me interviewed by Sharon Firebrace on Razor Sharp on Tuesday 18 February. (0)

My interview Razor Sharp 11 February 2014
Me interviewed by Sharon Firebrace on Razor Sharp this morning. The Royal Commission, car industry and age of entitlement get a lot of the coverage. (0)

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Save Medicare

Demonstrate in defence of Medicare at Sydney Town Hall 1 pm Saturday 4 January (0)

Me on Razor Sharp this morning
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Australia – egalitarian and classless?

The idea that Australia is an egalitarian and classless society is bullshit. You only have to read the BRW rich 200 list about the billionaires and multimillionaires to know we are a society divided by wealth, divided by class.

Yesterday the OECD confirmed what we and what all the Occupy people around the world could tell you – the gap between rich and poor is getting worse.

Indeed, in Australia, the top 10% saw their income grow 4.5% per year since the mid-80s.  This was the biggest growth of any of the OECD countries.  

For the bottom ten percent the figure was 3% per year, also a high rate of growth by comparison.

But compounding a 1.5% difference over more than 20 years creates a huge disparity. Peter Martin in the Sydney Morning Herald put it well. As he explained:

… the compounding effect of the different rates has opened up a very wide income gap. A family taking home $30,000 in the mid-1980s would be earning $68,000 today if income had grown 3 per cent per year. A family earning $30,000 enjoying a 4.5 per cent rate of growth would be earning $103,000 today.

Here are the OECD’s key country findings for Australia:

  • The richest 1% of Australians saw their share of total national income almost double, from 4.8% in 1980 to 8.8% in 2008. Moreover, that of the richest 0.1% rose from 1% to 3%. At the same time, top marginal income tax rates declined markedly, dropping from 60% in 1981 to 45% in 2010.
  • Societal changes, such as more single parent families and people living alone, and people marrying within similar earnings classes, also contributed to rising household earnings inequality. At the same time, higher employment rates for women helped reduce household earnings inequality. Growing disparities and declining employment rates among men are the main drivers, explaining about two-thirds of the increase.
  • As in most other countries, the divide in hours worked between higher- and lower-wage earners in Australia is growing, confirming a trend seen in most OECD countries. Since the mid-1980s, annual hours of low-wage workers fell from 1300 to 1100 hours, those of higher-wage workers remained stable at around 2300 hours.
  • Labour market changes have been a key driver of inequality trends in Australia. The earnings gap between the 10% best and least paid full-time workers increased by a fifth between 1980 and in 2008.
  • Employment income makes up only a third of household income in the bottom quintile in Australia (compared to an OECD average of two thirds). This suggests jobless households face a much higher risk of falling at the bottom of the income distribution.
  • The tax-benefit system in Australia has offset just over half of the rise that occurred in market income inequality during the past two decades, a percentage that is higher than in many other OECD countries.
  • Nonetheless, since the mid-1980s, taxes have become less redistributive. Both progressivity and average tax rates have declined. And since the mid-1990s the overall redistributive effect also weakened. In most cases, out-of-work income as a proportion of in-work income has fallen, in part due to allowance rates failing to keep pace with wage growth. Only lone parents, whose income support is tied to an average earnings measure and who benefited from more generous family benefits, were excepted.The flattening of the personal income tax system in the mid-2000s (e.g. through increases to the top threshold) also contributed to a reduced capacity of redistribution.
  • Spending on public services in Australia is higher than the OECD average but spending on cash transfers is lower. Overall, these services such as education, health or care cut inequality by 17%, a little less than the OECD average.

In other words the rich got richer and the tax system got less progressive.

Taxing the rich would be one good start to redress this systemic trend of, to use the technical terms, shovelling our wealth to the parasites.

But as the OECD analysis shows, this is an after the event occurrence. It is shutting the stable door after the carriage of the rich with its six horses has bolted. In any event, as the OECD has shown, tax policy and law are always changing to encourage the wealth shift to the rich or at least to restrain it less and less.

A better approach would be to address the issue at its source. Stop the wealth shift from occurring in the first place.

That means winning big real wage increases to win back some of the national income now going to capital. In fact the amount going to capital is now at its highest ever.

This is because to address the tendency of the rate of profit to fall bosses around the globe, including Australia, have got us to work longer and longer (unpaid) hours, to work harder and faster, with fewer staff.

The time has come to fight back, to win a more equal society by striking for big real wage increases.

And the time has come to redistribute wealth away from them and back to us by fighting to cut the working week to 30 hours.



Pingback from Australia – egalitarian and classless? | En Passant #Occupy « The Left Hack
Time December 7, 2011 at 8:47 am

[…] Posted by Darin Sullivan on December 7, 2011 · Leave a Comment  via […]

Comment from Seamus
Time December 7, 2011 at 1:40 pm

Truly damning evidence isn’t it?

Always fascinating when information provided by the establishment can be damning of the status quo.

Comment from billie
Time December 8, 2011 at 4:35 pm

Read Peter Acton’s tongue in cheek letter to the editor in today’s Age – it expresses my sentiments beautifully.