If there’s one issue that’s been a hot topic around kitchen tables in the past month, it’s the Federal Budget and whether or not it will widen the gap between those who have much, and those who don’t.
A national poll out today (Monday 16 June) confirms this deepening concern within the Australian community – 79 per cent of us think the gap between the richest and poorest Australians has widened over the past decade, with the majority of those saying they think this is making Australia a worse place to live.
New research also shows just how big the gap has grown – the wealthiest one per cent of Australians together owns more than the least wealthy 60 per cent of the nation’s population.
Meanwhile, the richest 9 people have the same net worth as 4.54 million of their fellow Australians, who make up the bottom 20 per cent of the population.
The figures are a staggering illustration that the wealth gap in Australia is stark and mirrors a global trend that needs to be addressed by the Australian Government and governments around the world.
Australia, as president of the G20 this year, has a major opportunity to tackle inequality – which is growing globally and in all but four G20 countries.
It’s true that some inequality drives economic growth and progress, rewarding those with talent, hard earned skills and ambition.
However, extreme levels of wealth concentration threaten to exclude people from realising the benefits of their own hard work, and can actually hamper economic growth itself.
Extreme inequality – the likes of which we are seeing right around the world, prompting the Organisation for Economic Cooperation and Development and the World Economic Forum to ring alarm bells – is not only unacceptable and wrong but has the potential to fuel conflict and instability.
If the poorest of the poor cannot afford decent health care and education, how are they supposed to become as productive members of society as they could be?
There is also a real danger that widening inequality is helping the richest subsume democratic processes and drive policies that promote their interests at the expense of everyone else.
For an international development agency such as Oxfam, global income inequality makes the fight against poverty even harder. Each new dollar that goes to the top income earners is not going to the poorest – those living on less than $2 a day who need it most.
Money is also being lost from developing countries because big multinational corporations are not paying their dues.
A network of secrecy and low tax rates facilitates the illicit flows of large amounts of money from the poorest countries.
In 2011, the amount of revenue developing countries lost was valued at just under USD 1 trillion. About half of these illicit flows from developing countries are attributed to profit-shifting by multinationals (the shifting of profits to low-tax jurisdictions and losses and costs to high-tax jurisdictions in order to minimise tax).
This represents a loss of tax revenues of around USD 100 billion.
In countries where children die needlessly from easily curable diseases, this money would make a real difference and improve health and education systems.
The Australian Government has put an economic growth target firmly on the agenda of this year’s G20 meeting in November in Brisbane, but it ignores the threat of rising inequality to this growth strategy at its peril.
Most Australians surveyed think the Australian Government should tackle the increasing issue of inequality, so that the benefits of economic growth around the world can be spread more evenly and benefit everybody.
Australians seem to have cottoned on to the unfairness of the world we have created, where the wealthiest one per cent owns half the wealth, with the other half shared between the remaining 99 per cent.
The Australian Government can fairly and squarely tackle this problem, firstly by putting inequality on the G20 agenda for world leaders to take action on in Brisbane later this year.
It can also use its G20 presidency to reform the global tax system – which it has promised to do – to crack down on tax dodging by multinationals and close the legal loopholes that allow the very rich to escape their tax responsibilities, through the use of tax havens for example, which Oxfam estimates hold around $US $18.5 trillion.
Imagine what good this money could do, both here in Australia, and in poor countries in our own Asia-Pacific region, which remains home to the majority of the world’s poor.
It seems that in the minds of Australians, the jig is up – more than three-quarters of Australians surveyed think the very wealthy in Australia do not pay enough tax. And 88 per cent think the Australian Government should crack down on tax dodging by multinationals.
By concentrating wealth and power in the hands of the few, inequality robs the poorest people of the support they need to improve their lives, and means that their voices go unheard.
If the global community fails to curb widening inequality, we can expect more economic and social problems, undermining efforts to eradicate poverty.
Dr Helen Szoke, Chief Executive of Oxfam Australia
Oxfam is releasing the research on Monday 16 June in the lead-up to next Friday’s Civil 20 (C20) Summit in Melbourne (20 & 21 June), the first of the G20 ‘satellite’ conferences in the lead-up to the G20 Leader’s Summit in November. G20 officials from around the world are also in Melbourne meeting over three days from Sunday 22 June.
This opinion editorial first appeared in The Herald Sun on Monday 16 June 2014.
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