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Excessive inequality in any society is harmful. When people with low incomes and wealth are left behind, they struggle to reach a socially acceptable living standard and to participate in society. These are Australia’s real ‘battlers’. When a minority of people accumulate income and wealth well above the rest of the population, this can lead to excessive concentration of power that becomes self-perpetuating, fraying the bonds of social cohesion and trust. Australia prides itself on its egalitarian traditions, where the extremes of neither poverty nor affluence (a ‘bunyip aristocracy’) are acceptable.

Too much inequality is also bad for the economy. When resources and power are concentrated in fewer hands, or people are too impoverished to participate effectively in the paid workforce, or acquire the skills to do so, economic growth is diminished. The Organisation for Economic Cooperation and Development (OECD) estimates that rising income inequality has reduced economic growth by an average of around 5 per cent across OECD countries over the two decades to 2010.

There will always be debate over how much inequality is ‘too much’. What is not in doubt is that in most wealthy nations, inequality of income and wealth has increased substantially since the early 1980s. The OECD reports that on average in wealthy countries in 2015, the 10% of people with the most income received 9.6 times the income of the 10% with the lowest incomes. In the 1980s, that ratio stood at 7:1, rising to 8:1 in the 1990s and to 9:1 in the 2000s.

The purpose of this report is to provide a factual underpinning to the debate about inequality in Australia, rather than to advocate policies to reduce it. We lay out, as simply and clearly as possible, the latest information on the incomes and asset holdings of people at the upper, middle and lower rungs of the ladder of economic prosperity, and who sits on each rung. We map trends in income inequality from 1999 to 2016, and in wealth inequality from 2003 to 2016 (based on the years for which reliable, comparable data is available), and point to some likely explanations for these. We also compare Australia’s experience with other countries who are members of the OECD.

The changes being experienced in Australia (as elsewhere) have the potential to fundamentally change the nature of our society, who benefits from our economy, and how. This change needs to be understood and debated if we are to plot our own destiny for the benefit of all people, and this report contributes to these tasks.

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