Is Increasing Inequality Inevitable in Australia?
Tom Conley Griffith University
I want to dedicate my government to the maintenance of traditional Australian values. And they include those great values of mateship and egalitarianism.1 10 years ago a Mitsubishi type development would have flattened people psychologically. Now they take it in their stride … 2
Policy-makers and commentators have long been cajoling Australians into accepting that they are a part of the global economy, which means an acceptance of a whole range of ‘new realities’. One of the major themes of the pro-globalisation position is that Australia has accepted these new realities and adjusted well to globalisation by embracing economic liberalism. The results, it is argued, have been overwhelmingly beneficial. John Howard points out the Australian economy has grown for fourteen years straight – a remarkable achievement by any standards. This success story of growth has tended, however, to override more disaggregated, negative analyses of social outcomes in Australia. A less sanguine part of this new globalising ‘reality’ appears to be an acceptance of rising inequality. Indeed, it is often implied that rising inequality is a spur for growth. The argument is that everyone is better off, it’s just that some people are better off than others. While commentary is often not explicit about the association of globalisation and rising inequality, occasionally it is: The other thing we have to face up to is that in the end we have to be a productive and competitive society and greater inequality might be inevitable.3
Others argue that rising inequality is not a problem if poverty is not rising. Edwards, for example, maintains: “increasing inequality is not of itself a bad thing, if even the poorest are markedly better off as a result of the forces that have made the rich richer.”4 Secretary to the Treasury, Ken Henry, argues that rising inequality should not be seen as a problem for policymakers: even supposing income inequality had increased slightly over the second half of the 1990s, should this be of concern to economic policy makers? The answer to this question is not clearcut. Importantly, there is no clear consensus on what an acceptable level of inequality is …
1 2 3 4
John Howard 1998 Victory Speech. John Howard (2004) “Doorstop Interview, Adelaide”, Adelaide, 19 August (http://www.pm.gov.au/news/interviews/Interview1083.html). Tony Abbott, cited in Mike Steketee (2003) “Still Work in Progress”, Australian, 7-8 June, p. 22. John Edwards (2000) Australia’s Economic Revolution, Sydney, University of New South Wales Press, p. 55.
Moreover, the policy lesson to be drawn from a reform-induced widening of income inequality is not obvious. Policy makers are very likely to believe that the market liberalising reforms of the past couple of decades in Australia have contributed to rising average incomes, and that the income gains have been widely shared. Is anybody seriously suggesting that those reforms should be reversed, in the certain expectation of significantly reduced average incomes and the highly speculative hope of a more egalitarian distribution of a smaller cake?5
According to perhaps the most important bureaucrat overseeing the economy, the costs of doing something to seriously address inequality would be too high in a globalising world economy. Increasing inequality is not seen as a problem; instead, it is viewed as an unavoidable component of efficient and globalised capitalism. The aim of this paper is to consider the phenomenon of rising inequality in Australia and to assess whether it is indeed an inevitable and hence unavoidable by-product of economic liberalism and globalisation. The paper argues against the proposition that inequality is inevitable by stressing that there is a clear role for government in reducing inequality. This is the case even if...