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Economic Inequity in Australia


Economic inequity is the unequal distribution of income and economic opportunities between different people and groups in a society. Economic inequality is a concern for all nations all over the world. Considering the world wealth distribution, the majority of wealth is held by a few nations or individuals, with a good number of the majority in the tail and poverty (Roser, 2013).

It is evident that the living conditions are considerably different from each other from one country or part of the country to another. For the past twenty years, there have been changes in the economic waves, and the division of wealth has unfairly been claimed by the rich; that is, the rich have gotten richer while the poor are also getting poorer every day (Roser, 2013).

Inequality can be viewed from a different direction, borrowing from the definition of economic inequality; we could either see inequality through the lives of others. The inequality in our daily lives is visible through the difference in the living standard and the quality of life. On the other hand, inequality can be viewed as an opportunity to achieve a good outcome. It is important to note that these two concepts of inequality are not separable from the lack of opportunity to achieve the good life (Van de Werfhorst & Salverda, 2012).

Statistics show that a child born in a country with a poor health care system, like most African nations, is 60 times more likely to die before reaching the age of 5 than a child born in countries with better health care life in Europe. Reports show that in such countries, only a single child out of 250 will likely die before reaching the age of 5. Inequality has affected not only the right to live but the access to education and all the basic needs. Today’s global inequality in opportunity is attributed to the global inequality in health, wealth, and education (Roser, 2013).

Economic Inequity in Australia

Just like any other nation in the world, Australia has reported high levels of inequality in wealth distribution among its citizens. From an economic perspective, inequality can be measured with varying indicators, but the most apparent indicators are wealth distribution, household expenditure, and income. Kaplan et al. (2018) reported that wealth inequality has grown in Australia over the past two decades to a point where the wealth of the top 20 % has grown ten times faster than that of those in the bottom 20 %. This growth is mainly attributed to the growth in the value of assets such as investments, properties and shares. Data has also shown that the wealthiest 1 % in Australia currently owns the same amount of wealth as the bottom 60 %, and the wealthiest person in Australia owns as much wealth as 2.27 million people, which represents the 10% of the bottom population in wealth hierarchy (Roser, 2013).

The primary indicators of economic inequalities in a nation are; household or individual income, household consumption, and wealth status. The rise in the price of houses has made the homeowner even richer in Australia; this has contributed significantly to the increase in the gap between the rich and the poor. A report by UNSW MEDIA (2022) indicated that 69 % of the overall increase in household wealth during the corona period was in residential property; this saw the value of real estate properties rise by up to 22% by the end of 2021.

Currently, Australia has 130 billionaires whose wealth rose by 12 % over the past year, giving them an accumulative wealth value of almost as much as the lowest 30 % of the Australian population. Measuring wealth inequality is quite challenging since it is not subjected to tax, and therefore, the data being used by researchers is merely an extrapolation from income and capital gain (UNSW MEDIA, 2022).

Income inequality in Australia has been rising, although labor income inequality has been declining. Randolph & Tice (2016) reported Australia’s economic growth to have been sustained for more than 20 years. This kind of growth has seen the country ranked the second highest in average income growth in the 2000s. The rise and fall of income inequality cannot be categorically placed as either good or bad; for example, in the mid-1990s, Australia had increasing income inequality rates, coinciding with sustainable growth.

Over time, households are in a position to accumulate income and assets through ownership and superannuation. This is in addition to life savings, a saving scheme for people to save all through their working ages till old age. All these accumulate to create household wealth inadequately distributed throughout the nation through the economic class. Any household with more money or wealth is inclined to save more and is patient when using cash. In addition, households with higher returns/wealth are generally more willing to take risky investments with higher rewards. For these reasons, wealth has concentrated at the top of the with reports stating that the top 1% holds almost 20 % of the entire wealth in the nation. This makes wealth inequality worse than income inequality (Shorrocks et al., 2021).

Finally, consumption can also be used as an indicator of inequality more accurately than wealth and income. Consumption is a better measure since households can use wealth acquired through borrowing or even their savings to compensate for their income throughout their lifetime. Economists argue that income can be an overrepresentation of inequality since when one loses their job, the income will fall. However, that household could still survive on borrowings and savings (Kaplan et al., 2018). Research from the reproductive commission has also confirmed that consumption inequality is generally lower than income inequality.

Role of the government

Economic inequality remains a significant problem for the people of Australia, despite the improving living standards and the improving income. The government can minimize the effect of economic inequality by finding and equalizing dominators using their economic power to boost the bottom section, thereby improving or encouraging the poor to invest and improve their economic status.

Property tax

The government can use property tax to reduce economic inequality. Australian real estate is one of the country’s most improving sectors and can constantly improve throughout the year (Gaffney, 2019). Through a reduction in property tax, the government will be able to boost the access of middle-class citizens to buy houses, thereby increasing their wealth accumulation. The rapid growth of the real estate industry will result in the property’s increased value and, by extension, bridge the gap between the rich and the poor. Reports have shown that the number of young people who own houses has dropped between 2003 and 2021, but at the same time, the amount of income used to pay for house rent rose rapidly. When these houses have high prices, only the wealthy can afford them, and they will be renting them out to the middle class and the poor at very high rates increasing the inequity in income and wealth. The property tax reduction might be a long shot, but it will allow the tenants to think of buying their haws without worrying about the enormous taxes.

Residential property prices continue to rise in Australia; the rise is attributed to the transparent regulatory system and capital operation. By improving the income of the low-income people in the country, the government is in a position to improve the purchasing power of the low-income earner, who will, in turn, accumulate wealth through residential properties and with reduced taxation on the same. They will be able to improve their wealth status and bridge the gap between them and the top wealth holders.

Low-income groups in Australia struggle to maintain their lives when they lose their jobs or are unable to find jobs. In comparison to other wealthier countries, Australian household take more debt. This is attributed to the ease at which they can access loans (Tomal, 2022). Fortis reason, the income adjustment policy should be reviewed in order to redistribute wealth. This will guarantee the low-income group a steady increase in their income, which will promote wealth accumulation and reduce income and wealth inequality.

In conclusion, it is essential to ensure that every taxpayer gets an equal opportunity and that the wage distribution and wealth distribution are fair. Economic equality in a country will result in people willing to put in the work, which improves the nation’s productivity.


Kaplan, G., La Cava, G., & Stone, T. (2018). Household Economic Inequality in Australia. Economic Record94(305), 117–134.

Randolph, B., & Tice, A. (2016). Relocating Disadvantage in Five Australian Cities: Socio-spatial Polarisation under Neo-liberalism. Urban Policy and Research35(2), 103–121.

Roser, M. (2013). Global Economic Inequality. Our World in Data.—–66f35a0b66c3———————-

UNSW MEDIA. (2022, July 22). New report: Wealth inequality in Australia and the rapid rise in house prices. UNSW Newsroom.

Van de Werfhorst, H. G., & Salverda, W. (2012). Consequences of economic inequality: Introduction to a special issue. Research in Social Stratification and Mobility30(4), 377–387.

Shorrocks, A., Davies, J. & Lluberas, R. (2021). Global wealth report 2021, s.l.: Credit Suisse.

Kaplan, G., La Cava, G. & Stone, T., (2018). Household Economic Inequality in Australia.Economic Record, 94(305), pp. 117-134.

Gaffney, M., (2019). Rising inequality and falling property tax rates. In Land Ownership and Taxation in American Agriculture (pp. 119-137). Routledge.

Tomal, M., (2022). Identification of house price bubbles using robust methodology: evidence from Polish provincial capitals. Journal of Housing and the Built Environment37(3), pp.1461-1488.


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