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X RUNNING HEAD POLITICAL SCIENCE
Major economic and political causes of increased income inequality in Australia since early 1980s
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Introduction
It has been witnessed that the issue of income inequality is taking worst form in Australia since 1980 and a drastic increase in income inequality has been observed. One of the toughest things at present is maintaining equality and most of the countries fail in achieving that. Income inequality could be found in many countries but in Australia, income inequality has reached at its peak. Income inequality refers towards the degree to which wealth is unevenly distributed and shares being received by different groups in varying amounts (Ablett et al, 2019). Since 1980, Australian population has been facing various economic instabilities that led to increased income inequality, that has stretched more gap between haves and have nots, in order to identify haves and have nots, it is necessary to find and analyse circumstances that create as well as manipulate the gap. Economic conditions and wellbeing of every country are determined by the command of its individuals over the economic resources present. According to many experts, political and economic causes are the driving forces that are working behind this increased income inequality for the last few decades.
Discussion
Statistics and pieces of evidence show that income inequality has become an important feature of the Australian economic landscape. People in Australia are being excluded in various ways such as the right to have a house, health facilities and education. Increased income inequality in Australia is taking people away from the necessities of life. To cease this increasing income inequality, there is a need to investigate the cause and then find the solution accordingly for fighting against these causes (Li et al, 2019). According to the experts, income inequality in Australia has shone a light on the income inequality and gap that exists between two classes increased.
Economic causes have greatly influenced and increased income inequality and this difference of income arose significantly during the period of early recovery from a recession. One of the central economic causes that has increased the income difference is unequal distribution of wealth by the state as government policies are favouring the elite class only. Rich list complied from the Business Review Weekly since 1980s updates Australian Financial Review annually. Importance of inherited wealth was compared with entrepreneurship among the super-rich Australians. Some negative impacts of economic inequality are symbols of other underlying trends. One of the basic economic factors that has increased the difference between the upper and lower class since 1980, is the unequal distribution of wealth that is widening the gap between poor and rich (Saunders et al, 2018). One of the most obvious economic cause/factor of income inequality is increased wage disparities (Pham et al, 2019). Though the rate of increase in income inequality varied with time, but enhanced wage disparities are there for years without any break. Wage disparity is likely to be explained with the help of other economic changes by Australias wage-fixing institutions who claim that it is one of the economic cause of increased income inequality. Other factors are also responsible for it. It has been observed that same jobs are offered with different wages depending upon the gender. Men earn more than woman, as according to the National Gender Pay Gap in Australia, on average, men earn 241.50 more than women per week. National gender pay gap stands at 14 per cent, as per the latest data of the Workplace Gender Equality Agency and this form of wage disparity is increasing the income inequality in Australia.
Another major economic cause/factor of income inequality is unemployment as it has been seen that Australian income inequality is being influenced by mounting unemployment rate. Difficulty in finding a job is far more important economic issue for those who are unemployed. It is a fact that earning is the largest source of household income. People living in same country are having huge income gap that is partly a function of disparities in wage rates. Per hour income is also strengthening the income inequality. Wage disparity is continuously increasing for the last thirty years and there is no possibility or ray of hope that this trend will halt or reverse.
Underemployment must be blamed for this drastic income inequality too and in 2018, Australias underemployment rate remained at 8.3 that has been the highest number in Australian history after 8.8 recorded in 2017. Underemployment is important economic cause that must be considered when one needs to understand increased income inequality. According to some experts, it is the latest work epidemic as underemployment force people to work on any wage that they are being offered. Underemployment has a relation with wage disparity as people are hired just for hours rather than full-time jobs so they accept any wage that they are given (Nelson et al. 2019). Another major economic factor that must be focused for understanding the income inequality is that inflation rate mostly weakens the poor communities and they are forced to spend all that they have rather saving anytime for their future.
There have been witnessed two types of causes, economic and political that have increased income equality. It wont be wrong to say that income inequality increases depending on the areas, employers and the circumstances but on the other hand, political causes are also responsible for income inequality and cast more drastic impacts on people without any difference (Ploszaj et al, 2019). Political policies are being implemented all over the country and cast similar impacts. It is important to note that at the national level, in the 1980s and early 1990s, effectiveness of government redistribution policy increased and put all efforts for moderating the rise of market income inequality.
Political decisions and changes directly influence income inequality and especially government policies of redistribution to define whether the economic gap between people would increase or decrease. Taking a look at the political steps regarding economic conditions, it could be said that government policies that deal with income inequality become less effective since the mid of the 1990s to date. It has been seen that period before 1980s was a phase when Australia was strong economically maybe it was because of the strong employment and economic growth. Government policies were also in favour of the general public and were focused on equal distribution of opportunities through which people would earn their income. Tax implementation policies are also affecting and increasing the income inequality (Makin et al, 2019). Government policy decisions regarding tax are favouring elite class at present. Tax policies are directly in the interest of high-income group, so such tax policies could be looked upon as the political driving factors that are pulling rich at the highest end and poor towards the lowest end.
It is an alarming situation that Australia has been declared one of the countries in which income inequality is growing rapidly. Australian earning is received by the rich five times more than the people of the bottom line and many political factors are responsible for creating this unequal distribution of income among people. political decisions effect distorts the equal income opportunities and one of the main political factors for increased income inequality is the inconsistent tax treatment of savings that distorts the fairness of the tax system. Australia made its way in the list of countries with higher growth income inequality since last 30 years.
Ineffectiveness of the policies are the main political factors that promote income inequality and it has been seen that employee compensation suggests that labour market critically debates on inequality and income gap as workplaces are main determiners whether government policies are fair to the society or not (Lopez et al, 2019). According to the OECD Economic Survey of Australia, Australias income inequality has risen primarily due to higher earnings inequality. Government and political parties are not paying attention to part-time and other precarious forms of work that are making people jobless and they are left with no option for earning their household income.
Social security, tax system and public policies particularly in the areas of education and health play a critical role in determining whether the wage gap is reasonable or not between the top and bottom spectrum (Tapper et al, 2019). Political parties fail to pay attention towards the growing issue of wage inequality and they failed to understand if they would not be having a robust wage floor and wage-fixing mechanism, all the burden would be on welfare and tax system and it would become difficult to deliver fairly in the society that would increase income inequality ultimately.
Political parties and government policies are favouring the industrialization that is also drawing a line between the rich and the poor. The heads of the society (rich) are investing and building businesses where all the work is done by the lower class. Workforce labour is earning more and getting less as it could be seen that labours put all their efforts but at the end, all the profits are going to the rich and poor are still living in the same circumstance. Failure of policies in managing the income inequality led to slower average economic growth rates by promoting and encouraging investments in financial assets rather supporting the real economy. The political rivalry could be also looked upon as one of the main causes that have become a hindrance in the way of mitigating the increased income inequality (Kelman et al, 2019). It has been seen that the political stance and opinions of different political parties fail to provide a fair system of income. Greater concentration of income in the hands of elites is supported by political and economic capture. Political parties and their agendas failed to focus on relative well-being of those who are in the lowest 40 income group and facing issues regarding poor health and poverty. Political powers are being conferred by the rising wealth and it allowed the elites and the economic winners to get more advantage of the government policies.
Since 1980s several nations, including Australia are facing increased inequality of income and there have been witnessed various factors behind this increased income inequality. Growth of the technical field is one of the main factors that is affecting income of Australia as demand for highly skilled worker has raised. Fostering improvements in technology could be looked upon as an economic factor that affects the equality of the income. At the same time, every political party tries to bring changes in the technical field so that they could excel from other political parties and the rivalry of the political ideas increases income inequality (Callander et al, 2019). Increase in the quality education could be also looked upon as an economic factor that increase the income inequality. Quality education is partly provided (private schools) as because of bad economic conditions not all individuals could access the quality education so increasing quality education reduces the inequality for those who are less skilled. When people with no or low-level skills come to seek jobs they badly fail and it is the point income inequality start growing.
Unequal redistribution impacts Australian fiscal policy that greatly depends on targeting of the level of transfers. In the public sectors, political policies must be made by focusing on the increasing progressivity of its tax system. Political policies were effective in past because in past there was no need of such but hat present tax is the main thing that is dividing the social classes because the government is not paying attention towards the ways that could help in getting maximum tax from the top earners and that is the main point of increased income inequality. Thirty years before there was no need of proper taxation policies as there was no such income inequality as it is present at present, but the government policies and political authorities are not paying sufficient attention towards the taxation policy. Increased tax revenues by raising rates and by reducing the exception to income and production taxes government could bring things as they were before the 1980s. it has been a witness that the burden of tax on the Australia government is the lowest as compared to the other countries which have become an important political cause for increasing the income inequality in Australia. Government policies are ignoring the taxation policies and this lack of attention towards tax policies is encouraging elites to widen the income gap.
Conclusion
Taking a look at the above-mentioned discussion and present conditions in Australia regarding income inequality, it could be said that various factors are responsible for stretching the economic differences between social classes. It has been witnessed that elite class is getting no harm because of the government policies rather it is the poor class that is the most affected. Two of the main causes for the increasing income inequality are economic and political factors that are underlining the discriminatory line between the head and hands of society. Underemployment, unemployment and wage disparities are the main economic causes that are responsible for the growing income inequality in Australia. Changing patterns of tax implementing and encouraging industrialization and globalization are somehow affecting the income of labours. Political policies are mostly benefitting rich and the elite and poor are becoming poorer with time as social security system has failed badly for providing equal growth opportunities to all the Australians. So, as a whole it could be promulgated that there exist various economic and political factors that are widening the gap between two main social classes (rich and poor) of Australia. There are many steps that could be taken by the Australian government for making the deteriorating situation better. Political powers need to come on the same page for saving the Australian economy that has been parted between strong and weak population.
References
Ablett, P., Morley, C. and Newcomb, M., 2019. Social Work, Human Services and Basic Income. InImplementing a Basic Income in Australia(pp. 215-235). Palgrave Macmillan, Cham.
Callander, E.J., Fox, H. and Lindsay, D., 2019. Out-of-pocket healthcare expenditure in Australia trends, inequalities and the impact on household living standards in a high-income country with a universal health care system.Health economics review,9(1), p.10.
Kelman, M., Ward, M.P., Barrs, V.R. and Norris, J.M., 2019. The geographic distribution and financial impact of canine parvovirus in Australia.Transboundary and emerging diseases,66(1), pp.299-311.
Li, J., La, H.A. and Sologon, D.M., 2019. Policy, demography and market income volatility What was shaping income distribution in Australia between 2002 and 2016.Luxembourg Institute of Socio-Economic Research (LISER) Working Paper Series,2.
Lopez, A.D. and Adair, T., 2019. Is the long-term decline in cardiovascular-disease mortality in high-income countries over Evidence from national vital statistics.International journal of epidemiology.
Makin, A.J., Pearce, J. and Ratnasiri, S., 2019. The optimal size of government in Australia.Economic Analysis and Policy,62, pp.27-36.
Nelson, T., McCracken-Hewson, E., Sundstrom, G. and Hawthorne, M., 2019. The drivers of energy-related financial hardship in Australiaunderstanding the role of income, consumption and housing.Energy policy,124, pp.262-271.
Pham, T.N. and Vo, D.H., 2019. THE IMPACT OF EARNINGS FROM THE ELDERLY WOMEN ON HOUSEHOLD INCOME INEQUALITY IN VIETNAM.International Journal of Business Society,20(2).
Ploszaj, A., Singh, T. and Su, J.J., 2019. Income Inequality and Foreign Direct Investment in Australia.World Economics,20(2), pp.115-148.
Saunders, P., Wong, M. and Bradbury, B., 2018. INEQUALITY IN AUSTRALIA NEW ESTIMATES AND RECENT TRENDS RESEARCH METHODOLOGY FOR 2014 REPORT.
Sila, U. and Dugain, V., 2019. Income, wealth and earnings inequality in Australia.
Tapper, A. and Fenna, A., 2019. The Relationship between Income, Wealth and Age in Australia.Australian Economic Review.
POLITICAL SCIENCE
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