At the end of November, the Federal Government called for submissions from individuals, businesses and community groups ahead of the 2022-23 Budget. UnitingCare Australia is working hard to promote the views and values of the whole network in this consultation process.
Budget discussions are always an extremely competitive space. To maximise the impact of our 2022-23 submission, UnitingCare Australia will strategically focus on economic inequality and ageing, reflecting our deep concern for the growing number of people in our community who are struggling to survive on unacceptably low wages or income support and the growing workforce crisis in aged care.
Inequality is worse than we think
Aspirations for shared prosperity in Australia are unravelling under the sustained, twin trends of weak wage growth and rising asset prices. When it comes to wealth in the modern era, our standing at birth has never been more important, while our skills and effort at work have never been less important.
Over the past 10 years, ASX500 and property investments have provided strong average annual returns. Leading ASX indicators averaged around 9.5 per cent total annual return through the decade. ABS price of residential dwellings index averages around 5.5 per cent growth annually, before any income is collected for rent. Over the same period wage growth sat around 2.5 per cent.
There is a chasm, even within the middle class
In 2003, a household 20 per cent above the middle had 3.2 times more wealth than a household 20 per cent below the middle. By 2017, that gap had grown by more than 40 per cent. In 2017, the wealthier house was 4.6 times better off, notwithstanding both houses considering themselves to be ‘middle-class’.
Households at the bottom 10 per cent had less than one thirtieth the wealth of upper-middle class households in 2017. This was after the gap between these households had widened by almost 80 per cent since 2013. During this period, households on the maroon line actually lost wealth. Government action is essential, substantive policy reform needs to be implemented if we want to see a different outcome.
Inequality is bad for everyone
Reducing inequality would make a difference in two main ways:
- Reduce Direct Costs Greater inequality strongly tracks with stress, hunger, poor physical health, poor mental health, homelessness and social exclusion. As a result, the Government needs to spend more on services and payments.
- Limit Economy Drag Economic studies show income inequality has a negative impact on growth. More specifically, a bigger gap between low-income households and the rest of the population has a bigger negative impact on economic growth.
The Federal Budget is scheduled for 29 March 2022. As we finalise our platform, we look forward to advancing a clear and insight-led case for essential reform in each of these spaces. We will be actively engaged with key decision-makers and the public throughout this debate. Further ahead, our policy team will shift focus from the forthcoming Budget to the looming election.