Inequality: Fence 1/4

‘There’s never been a more exciting time to be an Australian’ (Malcolm Turnbull, 2016).

‘We’re being swamped by [her latest target]’ (Pauline Hanson, 1996, 2016).

These broad claims have become part and parcel of Australian politics, whether we believe them or not. Politicians who may be experts in running fish and chip shops, but not so much on counter-terrorism or multicultural affairs. Politicians who were privately educated, inherited their father’s millions, and let penalty rates be cut for thousands of workers, who aren’t so excited.  A recent broad claim that seems to be on repeat however, is arguably more important than the above examples, because the electorate’s reaction to it will determine the life of future governments and the priorities of future politicians.  

‘Inequality in Australia is at a 75 year high’ (Bill Shorten, 2016).

This four piece article won’t just fact check this claim, but look at why it’s a potentially significant statement. Oxford English Dictionary defines inequality as difference in size, degree, circumstances, etc. and gives the example of ‘social inequality’. Social inequality can be things like marriage discrimination, education inequality, healthcare inequality, racism and sexism. Economic inequality can be the gender pay gap, income, wealth and generational inequality.

The prima facie reason this statement carries weight is because, to acknowledge Australia has an inequality problem, is the first step in dealing with it. If we don’t collectively realise it, there’s no hope in fixing it. So far, it’s been met with mixed reviews. As expected, the government of the day doesn’t agree. So much so they’ve labelled privately-educated-son-in-law-of-a-Dame Bill Shorten, a socialist, and said inequality is staring over the fence and realising another guy has a jet ski and you don’t.

A government senator’s response went further than Shorten’s potential personal ideologies, to the policies recently announced by the Labor Party around negative gearing, capital gains, family trusts, raising top marginal tax rates etc. You don’t have to know exactly what each of these policies mean or aim to achieve, you just need to know they’re being packaged in an inequality arsenal, if you like.

The reason the government went personal straight away is because it risks looking weak when Labor’s package is compared to the government’s agenda, which is difficult to pinpoint at the moment. What worries the government even more though, is if the electorate sees inequality and takes up Bill Shorten’s claim. If your penalty rates have just been cut, if house prices where you grew up are simply out of reach, if you’re working for a shonky Labour Hire company, if you can’t get married, if you haven’t had a pay rise in years, then you might be more likely to feel the impacts of inequality. But let’s be clear, if none of these things are applicable to you, you don’t need to be experiencing inequality to acknowledge it’s there.

On this statement, the battle lines have already been drawn and quite quickly for that matter. The same day Labor expressly promises to tackle inequality, the government comes out and says Bill Shorten is engaging in the politics of envy and overstating the level of inequality in Australia. ‘If we make it harder for people to be successful there will be fewer successful people. Nothing is surer.’ This response raises two questions: How does reducing inequality make it harder to be successful? And, what is your definition of success? Because it’s not hard to conclude that you don’t think teachers, paramedics, tradies are successful, because they’re not out there earning millions.

If the battle is whether inequality exists and the war is the next election, it remains to be seen whether the government will win the battle, but they haven’t made a very good start. Now we’ve dealt with the politics of it, before we fact check this bad boy, let’s set some ground rules.

There is a difference between inequality and poverty. Poverty is being unable to access the goods or services considered necessary to have a reasonable standard of living. On the other hand, inequality is a more relative term that refers to the difference between population groups. They often fluctuate simultaneously but this is not always the case.

Inequality can be measured in three ways, the main being through the Gini coefficient. This works by placing a society between 0 and 1, 0 being wealth and income distributed equally among everyone and 1 being wealth and income resting only with 1 person. Therefore, the lower the coefficient, the more equal the society. For perspective, Australia’s Gini coefficient peaked during the GFC, then fell, then rose again in 2014 close to GFC levels at 0.337. Germany was 0.289 in 2014.

The two other ways to measure inequality are through ratios, which use a similar technique, but focus on the difference between the top and bottom income brackets. Now we’ve got our measurements, the next article will look at a range of tests as well as the Gini coefficient, to fact check whether inequality in Australia is at a 75 year high. In the meantime, keep an eye out for jet-ski memes.

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