Distribution of Income and Wealth: Concepts

Question 1

The richest 20% of Australians earn ___ times more than the poorest 20%

Answer 1

6 times more

Question 2

The wealthiest 20% of Australians own ___ times more than the poorest 20%

Answer 2

64 times more

Question 3

The 2 biggest sources of income in Australia are:

Answer 3

1) Wages

2) Government welfare

Question 4

The 2 biggest sources of wealth in Australia are:

Answer 4

1) Owning own home

2) Superannuation

Question 5

How does Australia’s Gini coefficient for income compare to the rest of the world?

Answer 5

It is similar to the OECD average

Question 6

How does Australia’s Gini coefficient for wealth compare to the rest of the world?

Answer 6

It is below the OECD average

Question 7

To what extent have government policies reduced income inequality in the Australian economy?

Answer 7

The Gini coefficient is 0.3, but according to the Productivity Commission it would be 0.45 (50% higher) if it wasn’t for the progressive tax system and transfer payments (welfare)

Question 8

How has the Australian Government changed marginal tax rates recently?

Answer 8

The ‘Stage 3’ tax cuts will start in 2024, and will eliminate one of the middle tax brackets, so people can earn more before their marginal tax rate increases. People earning below $90,000 will not be affected, while those earning above $90,000 may save up to $9,000 in tax

Question 9

What has the government done recently that would reduce income inequality in Australia?

Answer 9

1) Doubled the rate of Jobseeker (only during 2020) and provided additional cash payments to those on welfare

2) The ‘low and middle income tax offset’ reduced tax for those on lower incomes

Both of these were only TEMPORARY during the pandemic

Question 10

What is the pay gap between men and women?

Answer 10

Full-time female workers earn 87% of full-time male workers

Question 11

What is the pay gap between different family structures?

Answer 11

A person in a couple without children earns 45% more than a single parent

Question 12

What is the pay gap between different ethnic backgrounds?

Answer 12

Earn around $8,000 less per year than Australian-born workers

Question 13

What is the pay gap between different occupations?

Answer 13

Managers and professionals earn around double that of sales workers and machinery operators

Question 14

What is the pay gap between different age groups?

Answer 14

21-34 year olds earn around 35% less than the average adult income

Question 15

Why has wealth inequality in Australia been widening?

Answer 15

1) Rapid growth in house prices (around 20% per year), mostly due to low interest rates
2) High ToT and expansionary monetary policy has increased the value of shares

Question 16

Who is the richest person in Australia and what happened to them during the pandemic?

Answer 16

Gina Rinehart – doubled her wealth due to increased share prices for her mining company

Question 17

How has the Australian Government changed welfare payments recently?

Answer 17

Doubled the rate of Jobseeker during the pandemic, but then reduced them back to previous levels in 2021

Question 18

How would the Australian Government’s labour market reforms over the past 30 years have affected inequality?

Answer 18

On the one hand, the Fair Work Act includes a minimum wage and minimum ‘award’ conditions for each industry, reducing inequality.

On the other hand, since the 1990s the government has allowed enterprise agreements and individual contracts, allowing some employees to negotiate much higher wages than others.

In 2023, the Secure Jobs, Better Pay Act increased bargaining power for employees in low-paid and female-dominated industries (reducing inequality)

Question 19

How are the Australian Government’s recent changes to superannuation likely to affect wealth inequality?

Answer 19

1) During the pandemic, the government allowed those with low incomes to access (spend) their superannuation, reducing their wealth and widening wealth inequality
2) The government has raised the superannuation rate to 10% (and 12% from 2025), reducing wealth inequality