According to a new paper by the Australia Institute, the top 10% of earners in Australia have received 93% of the benefits of economic growth between 2009 and 2019, while the bottom 90% received just 7%. This trend was found to be far more pronounced in Australia compared to other developed countries such as the US and Canada. In addition, the study found that inequality has been increasing in Australia, even before the stage-three tax cuts.
Matt Grudnoff, a senior economist with the thinktank, stated that the increase in inequality is mainly due to the difference in wages and profits. While 90% of Australians receive income from wages, which have decreased in real terms, profits have been doing well and are mainly benefiting the top 10% of earners. The Australia Institute predicts that the stage-three tax cuts, scheduled to begin in July 2024, will exacerbate inequality in the country.
The study analysed the income per adult on a pre-tax basis, which shows how incomes are distributed before the tax-and-transfer system redistributes income to lower income households via welfare and public services. The data covers five economic cycles from the 1950s up to 2019, and reveals a complete reversal in outcomes over those 70 years. In the earlier periods, the bottom 90% of income recipients shared the benefits of economic expansion, with higher per adult incomes. However, their share has been slowly decreasing over time, and since the global financial crisis in 2007-09, their share has dramatically reduced.
The World Inequality Database, developed by leading international researchers on inequality including Thomas Piketty, was used to gather data for the study. The database collects data from national accounts, household surveys, fiscal data, such as taxes on income and wealth, and wealth rankings to compile their distributional national accounts that show how the incomes of different groups change over time as economies evolve.
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