RBA backs Labor’s inequality push

Via Domainfax:

Opposition Leader Bill Shorten’s recently claimed that inequality has reached a 75-year high prompting Mr Morrison to accuse the opposition of pedalling a “lie”.

Dr Lowe told a charity lunch in Sydney organised by Australian Business Economists that inequality “grew quite a lot in the 1980s and the 1990s and it has risen a little bit just recently”.

“It has become more pronounced in the past few years because of the of the rise in assets prices and people that own those assets have seen their wealth go up,” he said.

He then noted that the trend could present challenges for government.

“If you have rising inequality it may be harder to get policies of the middle ground, so that is a political aspect.”

Mr Shorten is preparing to unveil new tax changes at Labor’s NSW state conference this weekend – including a possible crackdown on family trusts and other forms of tax minimisation that benefit the wealthy – after declaring inequality to be the party’s defining mission going into the next election.

Mr Lowe made his comments in a Q&A session following his speech on the labour market and monetary policy where he attempted to hose down talk of a hike in interest rates, saying Australia won’t be blindly following central banks overseas.

Quite right, as MB noted, we know from the Australian Census that home ownership rates have collapsed among younger cohorts, while remaining steady (or increasing) for older cohorts:

We also know from the Grattan Institute’s research that the wealth of older generations has soared, due primarily to the surge of house values, whereas the wealth of younger generations has stagnated:

ScreenHunter_16200 Nov. 20 20.41

When one considers income and wealth side-by-side, Labor’s focus on inequality is entirely justified.

The solution is to cut skilled immigration, do tax reform like negative gearing, as well as a wider productivity push to shift more of the post-mining boom adjustment off wages and onto capital. That will trigger big falls in the dollar and share the load of the great deflation much more fairly.

 

Comments

    • casewithscience

      Are you Stephen Morris or Graeme Morris?

      Its not like the Libs are giving anything for the people. This is how democracy works.

      • Not sure if Graeme Morris is worse than Bruce Hawker and Nicholas Reece. Mr Reece advised Gillard!

        I wonder what advice it was. Let every Tom, Dick, and Harry into uni? Give 457 visas to KFC? Announce a cash for clunkers program (give cars to people that already have cars!)? Put in a $23/ton carbon price instead of $10/ton and refuse to give a $900 cheque to each poor voter?

      • Jacob, you are hilariously predictable. Hypothetically, an LNP cabinet member could be discovered to be a mass murderer on part with Mason or Bundy, and sure as the sun comes up, you’d be on here with some false equivalency bullshit about “well labor are just as bad” and then you would somehow find some way of ramming 457 visas for kfc into your post.

        yawn

  1. Nick Xenophon is smart enough to give a $75 cheque to each pensioner.

    The ALP did not even give me a $5 cheque after putting in the carbon tax. What is the carbon price now, Milne?

    The ALP and Greens need to learn from Xenophon.

    John Howard blamed petrol price rises on Aussies for not getting LPG tanks! And blamed house price rises on the states for not releasing more land! Brilliant!

  2. StephenMEMBER

    Inequality is on the rise…fkn derrrr!
    And a fundamental reason is lunatic monetary policy which inflates away asset prices whilst those unable or unwilling to strap in for the ride get left behind…increase govt. spending, reform tax system and raise interest rates.

  3. Mining BoganMEMBER

    Alan Tudge just on the wireless saying it’s getting better. He wouldn’t lie.

    He alo said Matt Campervan is a man of great integrity. No really, he did.

      • Mining BoganMEMBER

        Dunno. Will anyone call me racist if I do, because that’s a sin. Apparently.

        The Tudger also said that Australia gives enough opportunity for anyone to drag themselves out of poverty if only they would try. You know, like Matteo’s dad did…

    • Bob Katter was pissing himself laughing on ABC radio this arvo at Campervan shafting his mum; “If you’re telling me someone was made a citizen of another country without your knowledge, you’d be seriously testing my intelligence. I mean, give me a break!” and “Ignorance of the law has never been an excuse and I don’t think that any jury or court in Australia — or the public — would be so gullible to believe you could be unaware you’d been made a citizen of another country.” Even Bernardi had a crack: “Well, because it’s a bit like the dog ate my homework, isn’t it?” Campervan’s made himself the laughing stock of the nation and all those who support him.

      • >”Ignorance of the law has never been an excuse and I don’t think that any jury or court in Australia — or the public — would be so gullible to believe you could be unaware you’d been made a citizen of another country.”

        That honour is reserved to 457 visa slaves in Australia 😀

    • bolstroodMEMBER

      “I tell you son, and I wouldn’t lie,
      we’ll wear $10 shoes and eat rainbow pie.”
      Hoboe’s song.

    • Matt Canavan rolling out the Shane Warne defence just shows the level of sophistication in our current political class.

      I also think Labor could have a lot of fun at his expense leading up to the next election. Would you vote for a party that sells out its own mother?

      • It’ll be especially damaging in any electorates with strong migrant / cultural representation with a strongh matriarchal background

  4. They should bring back the old rule whereby if you tell a lie, you get a punch in the head.
    Imagine that, some old school physical recourse bought back in, for dodgy fks.
    Normally if nothing else is working, going back to basics usually helps.

  5. Hmmm looks like Phil Lowe has finally noticed the vast homeless tent city that has sprung up right outside the front door of the RBA’s Sydney offices …..

    • TailorTrashMEMBER

      ………and the way we are headed there will be an even bigger one in the forecourt of the opera house in the not too distant future …..

  6. Houses I am checking my comprehension of your article because you have finally written something sensible. Economy in balance requires increased incomes, lower aud ,flat to slightly lower asset prices. And slower immigration for now, too much labour in a capital importing economy does not automatically right itself, just makes capital more scarce and labour the reverse with predictable return consequences. RBA Gov Lowe has had a good rep for a long time and we are starting to see why.

  7. Don’t know how the RBA comes to the conclusion that inequality has slowed a bit in recent years. Looking at the house ownership graph, it has dramatically decreased in the 25-34 age group as well as the 35-44 age group and it doesent take into account the percentage of income that is needed to service the loan.
    Inequality hasn’t slowed in recent years, it has dramatically increased.

  8. So H&H you are implying that because BS is making big bold statements re inequality & all those tax dodging Trusts that BS is suggesting that ALP will advocate:- Cut immigration, produce real tax reform, improve productivity? LOL.