Question 4: Increase in Economic Inequality in Australia Economic inequality is a reality in Australia amidst a focus on egalitarianism. While the levels of inequality are below those of the United States of America and the United Kingdom, the fact is that Australia is headed into the same pitfall (Australian Council of Social Services, ACOSS, 2015). Britain, United States and Australia are among the countries in which economic inequality has risen at an alarming rate for the last 20 to 30 years (Griffiths, 2011). During the times when Australia experienced a stable economic coexistence, there are various institutions that enhanced the equilibrium in income and wealth generation and distribution.
Such institutions were founded on a number of aspects such as full employment, progressive income taxes, a unique wage regulation system, and equal access to public education, among others. These aspects shaped the Australian economic status by ensuring “relatively low taxes and public expenditures, and a flexible labour market” (ACOSS, 2015, p. 8). This task delves into the causes of economic inequality in Australia since the 1970s and the effect of this inequality on the quality of life.
The aim is to explore the factors that have caused a change in the stability of this nation and shed light on the repercussions associated with the experiences of the inhabitants in connection with economic inequality. The task relies on a review of available literature to come up with a conclusive evidence of the two aspects: economic inequality and quality of life in Australia. Causes of Economic Inequality in AustraliaIncome Inequality Income is a common measure of an individual’s or household’s economic stability and well-being. Scholars have investigated the impact of downgrading and upgrading on the income distribution.
Downgrading refers to an experience of lower incomes among the poorer population while upgrading entails relatively higher incomes for the richer population. Research depicts that polarisation is to blame for massive income inequality rather than a consideration of downgrading or upgrading in isolation (Griffiths, 2011). However, where massive economic inequality is experienced, upgrading is more a factor than downgrading. ACOSS reports this scenario in connection with the economic status of Australia. People at the top of the ladder, as far as income distribution is concerned, have five times more income than those at the bottom.
An individual at the top 20% has 70 times more wealth than a person at the bottom 20% (ACOSS, 2015). Over the last two decades, the income share of the top 20% populations has increased while those at the bottom and middle levels experience a decrease. While wealth has increased for both groups, those at the top report a 28% increment while the percentage increase in income for those at the bottom is only three (ACOSS, 2015).
Polarisation is, therefore, evident in the case of Australia in connection with income and wealth distribution and eventual economic inequality. Globalisation is a key element of consideration in economic inequality discussions, especially in developed nations (Conley, n.d. ). Proponents of this assertion argue that globalisation is a driver of change that denies the government a chance to redistribute the outcomes of economic growth in a way that would ensure equity. Government’s regulation in driving a country’s progress is no longer the norm of the contemporary society.
Opponents suggest a need to deviate from globalisation and instead encourage open-mindedness in fighting economic inequality. Worth noting is the fact that globalisation gets a consideration in every aspect of life and influences a wide range of trends nationally and internationally. It is widely blamed for the underdevelopment of nations and also praised for the development of others. Populations experience the effects of it in association with policy making. Globalisation is widely mentioned as a justification for the limitation of the government’s role in Australia and elsewhere (Conley, n.d. ). ACOSS (2015) posits that the equal distribution of the outcomes of economic growth experienced in the past is no longer practised in the contemporary context.
Policy-making has affected various aspects of economic stability such that the rich get richer while the poor get poorer in a competitive economy. For instance, Australia experienced eight consecutive tax cuts on income during the 2000s era. Before that occurrence, the tax was charged progressively and this meant that higher income earners paid more than low-income earners, a factor that enhanced equitable distribution of market outcomes.
With the tax cuts, however, the benefits went to the higher income earners though most households paid less tax.