The top 10 per cent of income earners are benefitting the most from Australia’s economic growth with the rest being left behind, according to a new report from The Australia Institute.
The data shows that between 2009 and 2019, the top 10 per cent secured 93 per cent of the income growth in Australia during that period.
“Since the global financial crisis, there has been a fundamental change in the operation of the Australian economy,” says the report, pointing out that ever since World War Two, the bottom 90 per cent of income earners reaped the majority of economic growth benefits until 2009 hit.
The Australia Institute’s report highlights stagnating wages, insecure work, soaring corporate profits and an unfair tax system as the culprits for what it describes as “inequality on steroids”.
This new research is expected to increase pressure on the Albanese government to reconsider the Stage 3 tax cuts before the next election.
About half of the stage 3 tax cuts will go to people earning more than $180,000 per year, leaving those who earn $45,000 or less with nothing.
“Australians are often told that productivity and economic growth are essential to rising living standards and, in turn, that we need to implement policies that promote higher productivity and economic growth,” write report authors, David Richardson and Matt Grudnoff.
“The implicit assumption is that all benefit from higher economic growth which will be ‘fairly’ distributed.”
“But this is not necessarily true—the benefits from the mining boom, for example, were not evenly distributed. Hence it is important to monitor exactly how the growth in the economy is being distributed.”
Grudnoff, who is also the institute’s senior economist, said that previously, Australia was known as “the land of the fair go”, but now, the data is showing that the “Australian dream has turned into an inequality nightmare, fuelling the cost of living crisis for low and middle-income earners”.
Compared to other developed countries around the world, the report shows that Australia’s income inequality from 2010 to 2019 was much higher.
While there’s a worldwide trend of economic growth going to the top 10 per cent of income recipients, the figure below shows a significantly stark gap between Australia’s top 10 per cent and bottom 90 per cent of earners.
With the Australian economy now experiencing a period of growth, the report emphasises that it’s important for all income groups to share in future economic benefits.
Moving forwards, these findings also raise some big questions, such as “how can Australia get back to an inclusive growth program?”.
And if this doesn’t happen, the report asks the grim question, “how long can Australia sustain an economic and social setting which excludes the bulk of its people from sharing in the economic gains?”