Transcript - ABC the World Today

Andrew Leigh MP
Member for Fraser
1 July 2013

TOPICS:                                Battlers and Billionaires

SCOTT BEVAN:                  As welfare groups warn of growing demands on their services, there are warnings about growing inequality in Australia. In his new book, Battlers and Billionaires, the Federal Labor MP Andrew Leigh, outlines the history of income inequality in Australia, which he notes is now approaching the highs of the 1920s. Mr Leigh says that's at odds with Australia's reputation as an egalitarian society. He's spoken to our reporter, Lexi Metherell.

LEXI METHERELL:              Andrew Leigh, in your book, you write of the Australian national character as having a peculiarly Australian quality of egalitarianism. What evidence do you have to support that?

ANDREW LEIGH:              There's lots of lovely Australian habits which have an air of egalitarianism about them. Most of us don't like tipping, we tend to sit in the front seat of the taxi and "mate" is a much more common word than "sir". We've had past central bank governors called Nugget and Nobby, which I guess reflect the larrikin spirit when it comes to the people in positions of high office. So, I think that egalitarian sprit still burns strong in Australia. The question is whether the economic reality is getting out of touch with it.

LEXI METHERELL:              As you write, the income share of the top 1 per cent has doubled over the last 30 years. Why are we seeing this growing inequality?

ANDREW LEIGH:              There's a number of big factors driving the rise in inequality: the collapse of trade unions has had a big impact. Unions had a strong, equalising influence on the work force and we've also seen globalisation and technology increase the gap between the top and the bottom. You see this particularly in the very top of the income distribution. So, since 1980, we've shifted about $400 billion from the bottom 99 per cent to the top 1 per cent.

LEXI METHERELL:              And, what are the implications of growing inequality for social fabric and for society at large?

ANDREW LEIGH:              Well, if you show people pictures of income distributions and ask them the society they'd prefer to live in, most choose the society with the more equal income distribution. I think it's because too much inequality offends our sense of fairness. If you were starting life and you didn't know which income group you'd end up in, you'd probably prefer a more equal distribution of income than a more unequal distribution.

LEXI METHERELL:              You're a big proponent of the measures included in Ken Henry's tax review of a couple of years ago - the former treasury secretary's tax review - and some of those measures are aimed at ensuring that there is better income distribution and that there isn't a growth in inequality. Is it time for the Government to look again at measures included in that review and revive some of them that seem to have been abandoned?

ANDREW LEIGH:              Well, I think what Battlers and Billionaires does is it illustrates, to some extent, why we need things like means testing, why it's really important for the educational system to be better for the most disadvantaged than it is for the most advantaged, and why we have to have that progressive taxation system and progressive expenditures, because, if we lose that, then we're really in danger of going down a track towards a society where the gap between rich and poor becomes too wide to bridge. I don't think that's happened yet, but it's certainly headed down that road with sky high executive salaries and a wealth gap that's grown significantly.

LEXI METHERELL:              How fundamental is the tax system though to addressing inequality?

ANDREW LEIGH:              Taxes are important, but so too are laws around unionisation and investment in education. Education is the greatest force that we've developed, not only for boosting productivity, but also for making Australia more equal. That's really important that we continue to have an education system that makes sure that the circumstances in which you're born don't determine the circumstances in which you die.

SCOTT BEVAN:                  Author and Labor MP, Andrew Leigh, speaking there to Lexi Metherell.

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Cnr Gungahlin Pl and Efkarpidis Street, Gungahlin ACT 2912 | 02 6247 4396 | [email protected] | Authorised by A. Leigh MP, Australian Labor Party (ACT Branch), Canberra.