Income Inequality In Australia Essay

Economic inequality is the difference found in various measures of economic well-being among individuals in a population, often referring to income and wealth. Income and wealth inequality is increasingly prevalent in Australia. The top 20% income group receives around five times as much income as the bottom 20% and the top 20% wealth group has 70 times as much wealth as the bottom 20%. Government policies are used to ensure fairness in the spread of wealth and economic opportunity throughout the economy. However policies can be amended and introduced to further reduce income and wealth inequality.

The government could create a stronger social security net to reduce inequality. Australia has a relatively progressive taxation system, which

According to the OECD Australia has above average wage dispersion coupled with a high part-time employment rate contributing to income inequality. Since the deregulation of the labour market, Australia has had increasing wage inequality, particularly disadvantaging workers of low education or skills and non-English speaking migrants. This is because workers with high human capital are able to negotiate higher wages through enterprise bargaining and common law contracts – whereas some workers continue to rely on the awards system and temporary work, as shown in the diagram (DRAW

One of the largest assets Australians own is property and housing, both of which are rising in value. The government could introduce estate or death tax, with a minimum asset test, which imposes a levy on wealth inherited from the deceased. Taking a portion of what a person would have inherited from a deceased’s assets and property addresses the problem of intergenerational inherited wealth and inequality. Revenue raised can be used to subsidise those on the lower end of the socio-economic spectrum, whether through direct tax cuts or through avenues such as affordable housing, education and healthcare.