Is the “Fair Go” over in Australia?

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The Treasury will release a report today applauding solid intergenerational income mobility – aka the progress of incomes dependent on your economic background – and its fascinating how the mainstream press put their spin on it.

The Guardian is dour:

Children born into Australia’s poorest households will have little more than a 10% chance of becoming top income earners in their lifetime, according to new Treasury research.

But Treasury research on intergenerational income mobility, to be released on Friday, found children in the bottom fifth of households were “60% more likely” to make this leap than in the US, where just 7.5% make it into the top fifth by income.

The report found that “poverty in the bottom decile is particularly entrenched”, a conclusion likely to add to calls to combat disadvantage through measures including raising the rate of jobseeker.

The SM/Age like to laud it over the Americans, who obviously have structural problems an order of magnitude worse than Australia:

Australian adults in their early 40s are significantly more likely than their US counterparts to climb from the bottom rungs to the top of the income ladder, although children born to financially well-off parents are even more likely to get ahead.

The treasury paper found that an Australian child born to parents in the bottom 20 per cent of incomes is over 60 per cent more likely to reach the top 20 per cent of incomes than an American child, with 12.3 per cent scaling the ladder in Australia, compared with 7.5 per cent in the US

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The Fish and Chips aka The Australian wrap it up as an attack on new Treasurer Jim Chalmers and fold in the report’s findings on the flooding instead:

Floods caused a $5bn hit to the Australian economy last year and were a major contributor to the 16 per cent increase in fruit and vegetable prices.

What’s really underlying the report is the fact that income inequality has broadened for those Australian’s who were not measured in that generation – a generation who have missed out in the mega-property boom, as the Gini co-efficient soared above the 0.3 level and stubbornly stayed there (the US is pushing 0.5):

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Even with rising incomes, it matters not if all the wealth is going to the older generation and staying there, and of course the main problem is housing costs:

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People on low incomes, who are increasingly renters, are spending more of their incomes on housing.

The inflation-adjusted incomes for the lowest fifth of households increased by about 26 per cent between 2003-04 and 2019-20. But more than half of this was chewed up by skyrocketing housing costs, with post-housing incomes climbing only 12 per cent.

In contrast, the real incomes for the highest fifth of households increased by 47 per cent, and their after-housing incomes by almost as much: 43 per cent.

 

Australia looks set to entrench two or more generations with high housing costs all at the privilege of an older generation, and neither side of politics has so far shown the resolve to address this problem head on.

So while it’s all well and good to point at the US with its enormous income equality problems, or suggest that because we’re almost as good as the uber-progressive Swedish that “she’ll be right”, the fair go seems to be all but over for future Australians.

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