Inequality in Australia
Inequality is a social, political, as well as an economic issue. It implies a state where people have unequal opportunities towards the access to essential services or commodities. As a result, it brings about stratification as people with similar characteristics to align themselves together. In Australia, inequality has been both a socioeconomic and political debate. The significant disparity types in Australia have been witnessed in income, gender and health. However, the government has managed to introduce the favorable legislation to address the issue of gender and health. People access healthcare facilities without many limitations as before. Also, both gender has taken leadership responsibilities as well as pursuing career paths. Thus, it is clear that Australia has not managed to address the issue of income disparities fully.
The Issue
Australia has been struggling with the problem of poverty and resource distribution. For the last two decades, there has been an upsurge in the country’s economic instability. The condition has widened the gap that has been existing between the rich and the poor. In any economy, the welfare of people is always measured by their ability to command the use of economic or financial resources. In Australia, there is a class of people who control the country’s economic resources. The rich people are those with many assets, shares, as well as bonds in financial institutions and companies. On the other side, the poor make a class of people with the majority. In Australia, the poor, or those people who do not have asses in the allocation of resources are middle-income earners. The poor live below the average lifestyles, which are expected by the majority in the society. It has been theorized that the course of the inequality in Australia is the number of shifts in social and economic structures. Due to the increased industrialization, an abundance of people shifted their focus on industry from the infamous agriculture. As a result, some sectors were designated by certain groups of people. Skill-based technical change, the effects of education, the polarization of high-income earners, as well as poor tax regimes caused an increased disparity.
Currently, the gap between the low and high-income earners has continued to widen
(Wilkinson and Pickett, 2010). Taxes, shift to educationally based professions and polarization has made the poor to remain poor and the rich being rich. Although there has been a campaign for equal pay for equal work, the parity question has not been answered. The ultimate effect has fallen on the poor people who are struggling to make their ends meet. It has caused challenges such as poor living standards, low access to healthcare facilities, as well as overdependence between the poor and the rich.
Evidence
In Australia, the upper and lower echelons income earners comprise 20 % of the overall population. Income inequality has been on the rise for the past 30 years among the OECD economies. However, the changes in the proportion among the quartiles do not take place at the same pace. As a result, Australia has been one of the countries struggling with this problem for long. According to the Australian Bureau of Statistics, the lower quartile income was 7.9 between 1994 and 1995. For the period of 2007-20008, this value was 7.6 (Australian Bureau of Statistics, 2014). However, the respective results, for the same period, changed from 37.8 % to 39.4%. These figures and other statistics demonstrate that the gap between the poor and the rich keeps on widening with time. Like other market economies, Australia distributes income to the factors of production, which include capital, land, labor, and enterprise. Income is defined as the relative flow of money from one sector of an economy to another. The income of the Australians is mainly in the form of profit, rent, salaries and wages. On the other side, wealth is the total stock of assets owned by an individual or country. Currently, there is a huge dependency on the low income owners. For instance, the state spent 8.6 % of its GDP for social assistance and support programs in 2006 (Australian Council of Social Services, 2012). Inequality is measured by looking at the share of income that each person takes in an economy.
Proposed Solutions
It is true that we cannot end income or wealth inequality. However, several measures can be put in place to reduce the gap between the haves and the have not's. Income parity is something that cannot be achieved since t has severe consequences for the economy. The proposed policy actions are meant to help Australia solve the challenges of a widening gap between the lower and upper quartiles populations in the marketplace. These policies include:
1. Considering increasing the country’s minimum wage;
2. Introducing a progressive system to taxation to ensure those who earn more give back in an equal measure to the government;
3. Increased investment in education;
4. An expansion of the Earned Income tax;
5. Reduce residential discrimination;
6. Building more assets for families.
These changes should be implemented by the government. Also, stakeholder involvement is significant to get valuable inputs on how to better the economic systems.
Expected Benefits
The proposal to reduce the income and wealth inequalities among the Australian citizens changes an abundance of things. Just like the gender and health parity issues, the question of income can be managed. If these goals are achieved, it will be easy to fight other forms of discrimination as all citizens will view themselves equal before each other. Income inequalities are the primary sources of social strife and political challenges. Countries with stable economies and equitable policies for distributing resources have peaceful political regimes. Thus, bringing the poor closer to the rich will help the society achieve massive developments (Australian Council of Social Services, 2014). Also, this situation will affect other macroeconomic variables such as reduced unemployment. For instance, increasing the minimum wage will accelerate the rate at which the number of people in the lower quartile on the earning scale increases. As the gaps reduce, the quality of lives improves and also, the access to necessities is guaranteed. Investing more in education will create a framework for sustainable development by equipping the subsequent generations with the right skills. By people living together, it will remove the idea of lesser beings and also the increased dependency on the rich.
However, the reduction of the inequality of the income gap has serious challenges
Based on theory and practice, there is a shred of evidence from the Lorenz curve which proofs that this policy may not work in a typical economy. As more people are empowered to become rich, the wealth of a nation increases. Also, the number of people with money increases. As a result, if parity is achieved, there is a likelihood of inflation. This may affect the economy differently as the wage bill and expenditure increases. Therefore, Australia should work to reach that gap which is sustainable.
Feasibility
Several challenges face the proposal of reducing the inequality gaps. For example, there is a fear of inflation as well as threatened job security. Moreover, there is a lot of opposition from the poor who do not wish to be associated with the other members of the society. However, the proposal improves job security as well as alleviating poverty. Besides, this proposal will reduce the increased dependence on the few wealthy individuals. Thus, if the proposed policy is adopted, it is likely that peoples’ living standards will improve. Currently, Australia has a sociopolitical climate that is gaining stability. The gender debate has been won, and now there is equity in many places. With this condition, the issue of wealth inequality can be quickly addressed. It will lead to decentralized developments by ensuring all the areas of the economy benefit from the national share. This condition with the political stability will help this proposal to pass by illuminating the need and significance of income inequality.
Recommendations
For the policy to be effective, there is a need for the government to play an advisory role to the citizens. Public participation and stakeholder involvement will also help bring insights that are acceptable to people. However, the government should not concentrate on reducing the disparity to zero. There should be that gap between the low and the high-income earners that is sustainable. The issue of the minimum wage should be reviewed to ensure that people’s salaries and wages reflect their lifestyles.
References
Australian Bureau of Statistics, 2014. Labour Force. [Online] Available at: http://www.abs.gov.au/ausstats/[email protected]/mf/6202.0 [Accessed 08/03/2018].
Australian Council of Social Services. 2012. Poverty in Australia: The first in a series of ‘Poverty and Inequality in Australia’. Strawberry Hills, N.S.W.: Australian Council of Social Service.
Australian Council of Social Services, 2014. Payment reform must reduce poverty, complexity, and exclusion from employment. Australia.
Wilkinson, R. and Pickett, K., 2010. The spirit level: Why equality is better for everyone. Penguin UK.
