New research paints a disturbing picture of the stark difference between Australians at the top and bottom of the wealth ladder.
- The wealth of the top 20 per cent has grown 68 per cent in the past 15 years in Australia, compared to 6 per cent for the bottom 20 per cent
- Inequality among younger Australians has grown faster than overall inequality
- There are concerns about a social and economic “catastrophe” when the Government halts coronavirus support payments
Pensioner Anne Ullman lives in Newcastle. Managing on roughly $26,000 a year, she struggles to keep the lights on.
“About an hour ago I was on the phone to Energy Australia, bellowing down the phone because of my electricity bill,” she said.
Ms Ullman cannot pay her energy bills.
“[Energy Australia] suggested I go to Bunnings and get an electric meter-reading machine and check every appliance in my house,” she said.
“But they said, ‘If [your meter isn’t faulty] then you’ll have to pay your bill plus [the cost of the meter reader].'”
And if Ms Ullman ultimately does not come good on the payment?
“Well they have the power at the end of the day, literally, don’t they, to turn off your electricity?” she said.
Ms Ullman is in the bottom 20 per cent of Australian income earners.
Poor getting even poorer
A new report from the Australian Council of Social Service (ACOSS) and the University of New South Wales — using the latest available ABS data from 2017-18 — shows how far behind those on the lowest incomes are from the nation’s richest households.
The report found the incomes of those in the top 20 per cent were six times higher than those in the bottom 20 per cent.
That is worse than 2015-16, when the ratio was five times.
ACOSS chief executive Cassandra Goldie said the findings of the report should shock people.
“It is extraordinary that while overall we’re a very wealthy country here in Australia, we’ve had so many children struggling to be fed properly,” she said.
“We’ve had people sitting with the lights off and not heating their houses, not able to afford the basics because their levels of income, and so little wealth, has meant that they are deeply distressed about their financial security.”
The report finds the distribution of wealth in Australia is even more unequal.
The average wealth of the top 20 per cent sits at roughly $3.2 million — 90 times that of the lowest 20 per cent, who sit on roughly $36,000 in assets and savings.
The report’s lead researcher, UNSW professor Bruce Bradbury, said the country’s richest households were able to grow their wealth, pulling them further away from the poorest households every year.
“People in the highest 20 per cent of wealth — their wealth grew 68 per cent over that period (the past 15 years) in real terms, compared to people in the bottom 20 per cent, whose wealth only grew by 6 per cent,” he said.
“That’s been driven by two factors: the growth in housing prices and also the larger amount of wealth people are holding in the superannuation fund.”
Inequality may temporarily improve during pandemic
Of course, with a stock market crash, and the government spending tens of billions of dollars on support payments, Professor Bradbury points out inequality may actually be falling during the pandemic.
“Paradoxically, up until now, the large government interventions have actually had quite a substantial effect to reduce inequality,” he said.
“The increase in the JobSeeker payment, that went to people who have lost their jobs, and the JobKeeper payment has reduced the loss of income for others.
“So right now it’s possible that inequality might have actually gone down a little bit.”
But as the economy opens up again, and share and property markets find their feet, inequality is expected to explode.
Those in the bottom 5 per cent are expected to go backwards by an average of $5,000 per year.
Professor Bradbury said that was because they were mired in debt.
“We’ll see what happens in the future, but many of those will miss out on becoming homeowners, and the associated advantages,” he said.
“That’s driven by the fact that some younger people are able to get into the home-ownership market and others are not.”
Looming ‘catastrophe’ when government support ends
ACOSS’s Ms Goldie fears there will be a social and economic “catastrophe” once most COVID-19 government supports are removed, a process that will start later this month.
“We have to ensure that everyone has at least enough income to cover the essentials, food and housing, and making sure they can look after their children,” she argued.
Pensioner Ms Ullman said she could not cope with any surprises from here, whether they were higher-than-expected bills or a loss of income.
“The only thing I believe we’re facing is no increase in the Age Pension,” she said.
“But it all makes a difference when you’re looking at every dollar, every day.”
Yesterday Labor voted with the Government to pass a six-month extension to JobKeeper.
That extension includes new rules that will see employers who no longer qualify for JobKeeper but are not yet fully recovered being allowed to take advantage of flexible workplace rules.
That will give them more freedom to stand down employees or reduce their hours.
Labor tried to introduce changes to that part of the law to ensure no employee would be left worse off than they would be if they were receiving the JobKeeper payment, but the Government did not agree to the amendments.
For those out of work and on JobSeeker, from September 25 they will lose $300 a fortnight, or $150 a week.
Under the new rates, a single person on the JobSeeker payment is set to receive about $412 per week.
Any further changes to the support payments will be announced in the Government’s October budget.