Inequality is present in every economy, but to what extent are income and wealth in Australia unequal and what government polices contravene income and wealth inequality? Income is defined as money that an individual or business receives in exchange for providing a good or service or through investing capital, while wealth is a measure of the value of all of the assets of worth owned by a person, community, company or country.
Income and wealth inequality refers to the degree to which income is unevenly distributed among people in an economy. The share of total income received by different groups measures inequality, this visually represented in the Lorenz curve. The line of perfect ...view middle of the document...
320 while single parent households receive 0.245.
Wealth is measured as the net worth of households, in the ABS survey of “Household Wealth and Wealth Distribution 2011-12,” the average value of household wealth was $728,100, with median household wealth drastically lower at $434,000. This reveals that a relatively small proportion of households have high net worth and a large portion of households have low net worth, concluding with the simple statement that: The distribution of wealth is more unequal in Australia than the distribution of income.
The disparities accounted for in the distribution of wealth and income tends to reflect wealth that is accumulated during a person’s working life and utilised during retirement. Whilst this sources the foundation of inequality, the distribution of income in Australia is influenced by socio-economic factors such as gender, age, occupation and ethnicity. Gender is a common inconsistency in various economies, during 2013 average weekly earnings for males were $1516 while females earned $1250, this is still coherent for males and females in the same occupational categories, and is augmented for opposite genders in different occupational categories. In terms of ethnicity, it has been recorded that persons born overseas earn more than persons born in Australia, that non-English speaking backgrounds earn less than English speaking backgrounds and the period of residence in Australia is proportional to the income earned. However, the lowest income earners in the Australian community are Indigenous Australians and being heavily reliant on government welfare, earn a substantial loss in income compared to that of non-Indigenous Australians.
The Australian government employs two primary methods of redistributing income throughout an economy to influence income and wealth inequality. This is through a direct impact policy that involves government intervention to reduce income and wealth inequality via taxes and transfer payments. In the 2000s a tax policy was utilised to decline marginal taxation rates and raise the tax thresholds for low to middle income earners, following with the elevation of the tax free threshold for the first and second tax bracket in 2012-13.
The second method, which indirectly impacts inequality in an economy, is composed of economic restructuring when implementing a microeconomic reform. The purpose of restructuring is due to the increase of inequality and enhanced benefit to high-income earners when microeconomic reforms, such as the Australian Fair Work Act 2009, have been executed. This reform initiated 10 national criteria for employment, with the Fair Work Commission responsible for annual amendments to the National Minimum Wage, sustaining the real wages of low-income earners. A compulsory superannuation has also been introduced to provide...