A new report from the Australian Council of Social Service (ACOSS) and UNSW argues that higher welfare payments should be maintained rather than handing higher income earners tax cuts. Its modelling shows that 58% of the tax savings will go to the top 20% of income earners, which would increase inequality:
“Even before the COVID recession, the highest 20% of households, with average after-tax incomes of $4,166 per week, had almost 6 times the income of the lowest 20%, with $753 per week. When it comes to wealth, inequality is even more stark: the highest 20%, with average wealth of $3.3 million, have 90 times the wealth of the lowest 20%, with just $36,000 on average.
“While we like to think of Australia as the land of a fair go, the reality is that Australia has significant levels of inequality, especially wealth inequality. The latest evidence from other research indicates that the Jobkeeper and Jobseeker Payments actually reduced overall income inequality despite the recession, but as these payments are wound back, the harsh effects of high unemployment and low income support payments for those affected and reductions in paid working hours will be revealed…
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Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
