Australia : Inequality and Prosperity and their Impacts in a Radical Welfare State

Over the past forty years the economic fortunes of Australian households have fallen into two fairly distinct periods. In the “disappointing decades” of the 1970s and 1980s, real wages stagnated, unemployment increased fourfold and male full-time employment as a proportion of the population fell by 25 per cent. Household income surveys show that real median incomes increased very little in the 1980s, with small gains in the late 1980s lost in the recession of the early 1990s. Since the 1990s, by contrast, Australia has been one of the fastest-growing advanced economies in the world, enjoying twenty-one years of unbroken economic growth and largely escaping the global financial crisis or Great Recession .The benefits of this growth in income appear – at least on the surface – to have been widely shared. The real disposable incomes of the poorest 10 per cent are now more than 40 per cent higher than they were in 1995. Middle-income households are more than 50 per cent better-off over the period. But the richest decile have enjoyed the largest increase in real disposable income of any OECD country.This paper explores the factors behind these trends as well as the impacts of growing prosperity and rising inequality on a range of social outcomes