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Inequality In Australia: A Bill to shift the debate

Seventy years after Australia’s burst of post-war institution building, it’s time to reorient our economic institutions to the challenges of our times. That’s why I’m introducing a bill to require the Productivity Commission to consider inequality.

HC “Nugget” Coombs, arguably Australia’s most celebrated public servant, had little affection for revolution as the means of social change. There is “only reform – the creation of new institutions, the recasting of those already existing, the revitalisation of the moral and social imperatives which lend them vigour.”

He was reflecting on the extraordinary growth of new institutions in Australian public life in the post war period. These institutions were designed meet the new demands of the Australian people – for full employment, a fairer distribution of national income, and public provision of services that were previously privately organised.

Australia has a proud tradition of innovative public mechanisms to deliver on public policy. Medicare remains an extraordinary achievement, and globally our superannuation system is much admired.

We’ve also proven skilful at recasting older institution to meet new challenges. The Reserve Bank’s role changed profoundly in the 1980s; re-orienting its activities to deliver effective monetary policy in a newly opened financial system.

The challenge of our times is inequality. In the 1980s and 90s, we transformed Australia’s political and economic institutions to respond to a more open world. Today, we need to retool them once more to address the increasing disparity in wealth and income.

Inequality is at a near seventy five year high. The three richest Australians own more than the million poorest put together. We are increasingly aware of the impact inequality is having on every aspect of life. More equal societies have less crime, are healthier, and have higher levels of trust and civic participation.

But it’s the impact of inequality on economic performance that has seen new critics emerge from some unlikely quarters. The OECD has estimated that from 1985 to 2005 inequality reduced growth amongst member states by almost five percent, while in January, IMF Chief Christine Lagarde warned leaders at the World Economic Forum that economic growth could only be sustained if it was equitable.

Australia has a long tradition of innovation in tackling inequality. But it doesn’t mean new approaches or institutions won’t be needed, or that existing ones won’t need to evolve.

That is why this week I have introduced a bill to the Senate that would require the Productivity Commission to consider inequality when it undertakes its work. The Commission is already required to consider a range of factors including the need avoid social and economic hardships arising from change and ensuring that the development of industry is ecologically sustainable. Inequality should be on that list.

The Bill also tasks the Productivity Commission with researching and regularly reporting on inequality. This follows the suggestion from my colleague Chris Bowen that the Commission regularly report how we are tracking as a nation in improving equality of opportunity and social mobility. The Commission would be required to prepare this Inequality Report every five years, in line with the Intergenerational Report.

This would be more than just another glossy booklet. The Productivity Commission’s work is both highly regarded and influential. An Inequality Report would regularly force the issue into the national conversation. It would assess inequality is in our regions and our cities, and whether government policies are making the situation better or worse. This report would provide policy makers with the research to more effectively address inequality, and provide the public with the information to hold them to account if they do not.

And it seems clear that Australians do want us to address in inequality. When surveyed, almost three-quarters of us agree that “differences in income are too high”. It is increasingly obvious to people the widening wealth gap limits opportunities. Australians don’t believe that wealth should determine the quality of our healthcare or the educational opportunities of our children.

We need our political and economic institutions to act, because inequality is not just a social justice issue – it is also a serious economic issue.

Government cannot afford to ignore inequality. It is the force behind many of the political disruptions we have seen overseas. At home it is the basis for much of our public discussion, such as today’s seemingly unconnected debates on penalty rates, corporate tax cuts, and the minimum wage. We should talk more about inequality, and we should do so armed with the numbers. My bill aims to give us the tools to do just that.

About Jenny McAllister

Jenny McAllister

Jenny McAllister is a Senator for NSW

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