Let's cast off the shackles of inequality

Tackling poverty is important, but the inequality debate largely overlooks the fact that many Australians' lives have vastly improved over time.

A number of welfare advocacy groups, such as the Australian Council of Social Service, tell us that poverty in Australia is worsening, if we take the numbers of households earning half the median income (adjusted for household composition and housing costs) as the poverty benchmark.

This focus on "relative poverty", in this case the level of income attained by certain households compared with others in the community, does not reveal whether the living standards of the poor, or anybody else, have improved or declined.

This distinction matters, because most people associate poverty with severe material deprivation or low life expectancy, whereas rising incomes for middle and higher income earners, in isolation, increases relative inequality even though overall living standards are on the improve.

Looking at living standards from a broader, macro-level perspective, recent research highlighted the incredible upward trajectory of indicators of health, income and wealth, education and connectivity that Australians have enjoyed for the past two centuries.

Infant mortality was much more common at the turn of the 20th century than it is today, with the number of infant deaths per 1,000 live births falling from 104, in 1901, to a little over three today.

Thanks to advances in medicine, and the discovery of antibiotics, few people now die of infectious and parasitic diseases such as cholera, typhoid, polio, smallpox and measles.

However, in the 1920s, as many as 154 people per 1,000 lives died each year due to such diseases, and even more unfathomable is the thought that 10,000 Australians died during the Spanish influenza outbreak in 1919.

The average Australian is also living longer than ever, in what must surely count as one of the most profound human achievements.

An infant born in 2012 will on average live to 82, while one born in the early 1920s would, on average, live to just over 60.  In other words, over the span of eight decades an average Australian could expect to add another 20 years to what was likely to be an increasingly fulfilling life.

The available statistical evidence shows Australians have tended to become more productive, and have amassed more income and wealth, with each passing year.  Adjusting for inflation, the value of final market production per head of population, or real GDP per capita, rose from about $11,100 at the time of Federation to over $66,500 last year, an impressive increase in average economic wellbeing.

One of the most visible manifestations of our improving living standards are the abundant household appliances and entertainment equipment furnishing our larger homes, not to mention our capacity to more easily connect with each other as technological advances become more pervasive.

Contemplate the radical reconfiguration of the humble telephone, say, from a clunky dial-up connected by fixed wires through telephone exchanges, to portable mobile phones transmitting signals through microwave transmission, to Skype connections through a personal computer, laptop or tablet device hooked up to Wi-Fi.

Advanced levels of human capital investment, through a higher education, are no longer a rarity, with about 1.3 million people enrolled in Australian universities last year, compared with fewer than 2,600 in 1906.  Importantly, more than 50 per cent of students in higher education institutions in 2013 were female, up from only 21 per cent in 1949, contributing substantially to their long-term income earning potential.

Life has improved dramatically for successive generations of Australians, and there is some encouraging evidence that the economic circumstances of the poor have, likewise, been improving.

A 2012 University of Canberra study showed that, after adjusting for living costs, the incomes of households situated within the bottom 20 per cent of the income distribution rose, on average, by $93 per week from 1984 to 2010.  Selective indicators show that the extent of assets and goods ownership by lower income households also appears to have grown over time.

ABS data shows about 23 per cent of households on incomes up to $44,000 had home internet access in 1998, rising to about 57 per cent of households with income less than $40,000 in 2013.

In the mid-1950s it was estimated about 40 per cent of all households had a washing machine, whereas by the late 1990s about 93 per cent of households living in highly disadvantaged areas owned a washing machine.  About 55 per cent of all households had at least one television in the early 1960s, yet by the late 1990s about half of disadvantaged-area households owned at least one television.

The presentation of these statistics is not to intimate that the poorest in our community, such as the 6000 people living rough on the streets nationally, are all living in the lap of luxury, but that people on lower incomes have not been strictly deprived of the various benefits afforded by a growing economy.

Although the lives of most Australians have improved, it is unwise to believe that future economic growth and social improvement is automatically assured.

Increases in the average price of goods and services have generally been modest since 2001, but in industries dominated or extensively regulated by government the opposite is true.  Prices of utilities, education and healthcare have all dramatically increased in recent years, far outstripping inflation, and regulated land supply limitations have played a critical part in driving up housing costs.

These rising costs adversely affect the living standards of lower income earners more than others, since they tend to be deprived of the greater choices made more affordable for those earning middle to high incomes.

Maintaining a free and prosperous society will be pivotal to ensuring that Australians continue to live longer, healthier, wealthier, smarter and, thereby, more fulfilling lives.

But in order for Australians to continue to enjoy more prosperous lives, we must restrain the growing burdens of government regulation, taxation and spending that hold all of us back.

ADVERTISEMENT