Cost of Living
Matter of Public Importance
House of Representatives
9 November 2022
It is certainly true that in Australia we have a strong egalitarian ethos. Ours is a country where many people would prefer to sit in the front seat of a taxi, where we prefer to use the word 'mate' rather than 'sir', where we don't have private areas on the beaches and where most people don't stand up when the Prime Minister enters the room. Yet, over recent generations, we've seen a steady rise in inequality. As Thomas Piketty outlined in his book Capital in the Twenty-First Century, we've seen, across the advanced world, an increase in the share of the top one per cent of income earners. We've seen an increase in the share of the top 0.1 per cent of income earners, tripling since the early 1980s. We have seen CEO pay increase far faster than an average worker's pay. Work by Tomas Kennedy and Peter Siminski asks the pertinent question: for Australians born in successive generations, what's the chance that they earned more than their parents? For Australians born in the 1950s, 84 per cent earned more than their parents. For Australians born in the 1980s just 68 per cent earned more than their parents.
We've seen a fanning out of real wages since 1975. Since 1975, wages at the 10th percentile have grown in real terms by 33 per cent. Wages at the median have grown by 55 per cent. But wages at the 90th percentile have grown by 81 per cent. That is, earnings are growing nearly three times as fast for the highest paid as for the lowest paid. Work done by Treasury, which I highlighted in my recent Gruen lecture, shows that market concentration has risen. The biggest firms have a larger slice of the pie than they did in decades past. Mark-ups have increased -- the gap between what firms charge and their costs has grown. Under the former governments we saw the JobKeeper scheme funnel some $20 billion of taxpayer money to firms with rising revenues, some of which used that taxpayer money to pay executive bonuses.
So the issue of inequality is a real one. It is an issue that matters deeply to those of us on this side of the House. My Labor colleagues and I got into politics because we care deeply about inequality. Indeed, it's one of the classic divides between left and right. But it's pretty ironic that the member who moved this MPI has chosen to do so on a day on which the House is debating the secure jobs, better pay bill—a bill brought to this House by a government that won a mandate at the last election to get real wages going again, to narrow the gender pay gap and to provide more flexibility for workers who want to combine caring duties with employment.
The very first act of the Albanese Labor cabinet was to approve a submission to Fair Work Australia which saw the minimum wage increased by 5.2 per cent. We made a submission to Fair Work Australia that saw aged care workers win a 15 per cent pay rise. We on this side of the House care deeply about the fact that under the coalition real wages fell. That's right: in a decade real wages were lower at the end of the coalition's time in office than they were at the start. That is an indictment on the former government.
Inequality also manifests itself in home ownership. Back in 1991, among baby boomers aged 25 to 39 we saw a reasonable share owning their own homes outright. Among millennials of the same age in the most recent census, the chance that they would own their own home outright had fallen by two thirds. Housing is, to a large extent, a supply challenge, which is why we went to the last election announcing our Housing Australia Future Fund, which would build some 30,000 social and affordable homes. It's why the Treasurer stood at this dispatch box on budget night, pledging a National Housing Accord which would see us work with the states, territories and private sector to build some one million homes.
When I'm out with my street stalls, one of the most common issues that constituents will come to me about is housing and their inability to break into the housing market. Yet if you're in Victoria then you'll be well aware of the Greens allying with their coalition colleagues in 2017 to overturn Labor's plans to rebuild public housing in Ashburton. Victorians would be aware, too, of the Greens-dominated council, the City of Yarra, rejecting last year a state government proposal for social housing around the Collingwood Town Hall. It would have seen 200 units constructed, 100 of them for social housing, but it was rejected because they were uncomfortable with the involvement of a commercial property developer. Then, just weeks ago, we saw the Greens threatening to block the Albanese government's $10 billion Housing Australia Future Fund in the Senate. If they had, they would have blocked 30,000 new properties for vulnerable Australians over the next five years. So you see from the Greens the approach which was so beautifully epitomised in the latest issue of the Wharf Revue, which I highly recommend to those watching the MPI today: all care and no responsibility.
From the latest budget, we've got measures being brought down by this government to reduce the cost of medicines, reducing the Pharmaceutical Benefits Scheme maximum co-pay to $30. That's important because we know it is lower income Australians who are more likely to use the healthcare system. If the members on the crossbench want to talk about the budget and inequality, they just need to look at those important reforms to reduce the cost of medicines.
And then there's the important investment in education. In the latest budget, we announced some 20,000 additional university places targeted at students from low-SES backgrounds: Indigenous Australians, those who are first in their family and those from regional Australia. We're prioritising those groups because we recognise the transformative power of education. Indeed, it is the life story for so many of my Labor colleagues. We've also announced hundreds of thousands of fee-free TAFE places because we know it's crucial to reducing earnings inequality by increasing the educational opportunities for Australians. Claudia Goldin and Larry Katz describe inequality as a race between education and technology. At a time when technology is advancing, it's absolutely vital to have a government that is investing in our education system, that is expanding opportunities through vocational education and universities in order to ensure that Australians have a shot in the labour market.
Gender equity too was at the heart of our budget. We prioritised cheaper child care, a reform that is absolutely critical to closing the gender pay gap. We have been prioritising the implementation of the Respect@Work reforms, recognising, as my former colleague Deborah Cobb-Clark has noted, the way in which sexual harassment in the workplace can hold women back from advancement and widen the gender pay gap. We're investing in women's safety and women's economic security, recognising the critical importance for Australian workplaces and for all Australians, men or women, to have safer workplaces.
The latest budget was brought down in the teeth of some of the highest levels of inflation we had seen, and a hallmark of the budget was the way in which it dovetailed with the work of the Reserve Bank. An unfunded cash splash would have merely driven up interest rates, hurting the very people we care most about and making more entrenched the problem of inflation and the challenge the Reserve Bank is fighting right now. And yet, extraordinarily, the member who moved this MPI is part of a party that is working to scrap Reserve Bank independence. As independent scholars have noted, if the Greens' policy proposal had its way, it would lead to capital flight from Australia. It would be enormously damaging for the macroeconomy.
We on this side of the House recognise the importance of working with the Reserve Bank. We are passionate about reducing inequality and we are proud pro-growth progressives.