Academic journal article Journal of Australian Political Economy

Richer, but More Unequal: Perceptions of Inequality in Australia 1987-2005

Academic journal article Journal of Australian Political Economy

Richer, but More Unequal: Perceptions of Inequality in Australia 1987-2005

Article excerpt

Australia's national income has doubled since 1987. Survey evidence indicates that Australians have registered better economic times, with 80 per cent of Australians saying they were proud of Australia's economic achievements in 2003 compared with 48 per cent in 1995 (Goot and Watson, 2003). However, the strong period of economic growth since the end of the recession of 1990-91 has been accompanied by increasing inequality in the distribution of income. The meaning of poverty has also been hotly debated (Saunders, 2005), as have the roles of work and welfare in redressing it (Carney, 2007; Mendes, 2008).

Stronger growth has complex effects on how much we think about--and tolerate--inequality. When growth is weak and unemployment high, critics have little trouble convincing a public that 'big structures' are the cause of inequalities. But how does the public respond to inequality when growth is robust and continuous, unemployment lower and opportunities greater? Does the public begin to see inequality as a collection of individual failings or worry less about it, believing 'a rising tide lifts all boats'? Following an examination of trends in income and labour market inequality over the last fifteen years, we explore how Australians have responded to the widening income gap. Drawing on data collected in major national and international surveys of social and political attitudes over twenty years, we examine how attitudes to inequality and redistribution change in a time of headline prosperity.

The public's response to inequality depends on how fair they perceive unequal outcomes to be, and how much of a role they see for government in doing something about it, usually by redistributing income. Over the past two decades, government has used social policy to respond to rising market inequalities in two major ways: the Labor government (19831996) targeted its transfer payment assistance to help reduce poverty and both Labor and the Coalition government that followed it increased the generosity of family income support, boosting the incomes of lower-middle income families. Australian spending on family assistance now ranks among the highest in the OECD (Australian Institute of Health & Welfare, 2007).

But these successes, which have helped contain poverty and overall income inequality at the household level, should not distract us from disturbing underlying trends in the labour market--the engine room of inequality. At the end of a long period of growth, and two decades of market-driven reforms, we see more of the American picture: rising earnings inequality in the labour market, runaway pay for executives and senior management and deteriorating conditions among low-skilled workers who, according to van Wanrooy and Buchanan (2007), have lost out under the Coalition government's now discredited WorkChoices legislation.

Given these changes, then, we hope to provide a picture of the public's recognition and response to trends in inequality and redistribution. We are guided by two questions: have Australians registered the growing gap in market or private incomes, and if so, who? Evidence suggests more Australians believe the gap between the well-off and less well off has grown, but a further question remains: do they support redressing this? The conventional approach is government-led redistribution. We find that, despite recognising inequality, there has not been any strong increase in support for redistribution. As Christopher Jencks (1972: 232) once pointed out 'The first step towards redistributing income is not, then, devising ingenious machinery for taking money from the rich and giving it to the poor, but convincing large numbers of people that this is a desirable objective'. We probe the data to understand why this might be the case, considering: a lack of real understanding of the inequality 'problem'; a preference for non-redistributine measures to redress inequality; and a possible confidence in the 'rising tide lifts all boats' approach to managing economic opportunity. …

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