Top Earners Get As Much In Two Weeks As Poorest Do In A Year
"It’s a struggle to do even the most basic things"
Hayden Patterson often has to choose between which of his crucial medical prescriptions he is going to go without each week. If he has $50 in the bank at any point, he's happy. He recently started heating his Adelaide unit with a gas oven -- he previously used an outdoor patio heater, but the fumes made him sick.
Meanwhile, a new report has found the top one percent of Australian households earn as much in one fortnight at the lowest five percent do in an entire year.
"It’s a struggle to do even the most basic things," Patterson told ten daily.
"I can't afford electric heating, my most economical way to heat my house is to turn the oven on. I make the most of what I can do."
The Inequality in Australia 2018 report, from the Australian Council of Social Services (ACOSS) and the University of NSW has shone a shocking light on income inequality, revealing the top 20 percent of earners have five times as much disposable income as someone in the bottom 20 percent
"The reality of income inequality in Australia will come as a shock to many," ACOSS said, and it's hard to dispute.
"At the more extreme ends of the scale, people in the highest one percent live in households that have an average weekly disposable income of $11,682 per week, 26 times the income of a person in the lowest five percent ($436)."
Some of the more astounding findings of the ACOSS report include:
- The top 20 percent have five times the disposable income as the bottom 20 percent -- nearly $4000 a week compared to $735 a week in 2016
- The highest 20 percent of earners receive more than the lowest 60 percent
- Most of those on the lowest incomes rely on social security including the aged pension or Newstart
- Average net wealth per household is $936,000 -- the top 20 percent of households by wealth own 62 percent of all wealth, while the bottom half own just 18 percent
- The average wealth of a household in the top 20 percent ($2.9 million) is nearly 100 times that of the lowest 20 percent ($30,000)
"I'm absolutely shocked by those stats," Patterson told ten daily.
"I’m well aware of the disparity but that blows my mind."
There are also 3000 Australians in the "ultra-high wealth" category, with a net worth above $65 million.
"Australia has the fifth-highest number of people in the world with that amount of wealth, an extraordinary finding given our relatively small population," ACOCC said.
ACOSS said their findings placed Australia as a more unequal society than the OECD average, but more equal than the "very high levels of inequality" in both the United States and United Kingdom.
“Our finding that those in the highest one percent earn as much in a fortnight as a those in the lowest five percent in a year deeply challenges our sense of Australia as an egalitarian country”, said ACOSS Chief Executive Officer, Dr Cassandra Goldie.
The report found disposable income rates for the bottom 20 percent had increased only slightly between 1999 and 2016, but had risen sharply for the top 20 percent and especially the top five percent -- and had largely plateaued since the global financial crisis.
ACOSS said the growing schism between rich and poor had come about through compounding effects of government policy, including income tax cuts favouring those on higher incomes and a failure to raise welfare payments to match inflation and cost of living increases.
For example, the Newstart payment -- for those aged over 22 and looking for work -- is currently set at $272 a week, far below the poverty line (defined as half the median income) of $426 a week, and the federal minimum wage of $694 a week.
Some people living on Newstart are surviving on just $17 a day after paying for accommodation, the Salvation Army said in a recent report.
"I’m on the disability pension and my neighbour is on Newstart. It has really highlighted the disparity between even those two. I can pay for internet and she can't, I can use my oven to heat my house but she sits in bed wrapped in blankets," Patterson said.
"She’s supposed to be looking for work, but how can you compete if you can't even afford internet?"
More than a third of sole parents are in the bottom fifth of earners; as are 77 percent of the unemployed, 24 percent of those born in non-English speaking countries, and 39 percent of those aged over 65
"Excessive inequality isn’t inevitable," Goldie said.
"We can work together to bridge the divide by lifting the lowest social security payments, removing tax loopholes that enable people with the highest incomes to avoid paying their fair share, creating a fairer system of pay bargaining, restraining executive salaries, ensuring education policies support children who struggle at school, and implementing effective strategies to improve housing affordability.”
“Unfortunately, the recently legislated income tax cuts, and a lack of action to lift the lowest social security payments including Newstart Allowance, both take us in the wrong direction on inequality.”