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Audio Australians, including the Prime Minsiter, can no longer afford to ignore the problem

Eleanor Hall

Both the US president and the head of the International Monetary Fund have identified inequality as a major threat to global stability. Today the former Liberal leader John Hewson is launching a report in Parliament House today, examining at the extent of the problem in Australia. The lead author and convener of the group, Professor Bob Douglas, joined The World Today to discuss the findings.


ELEANOR HALL: The US president and the head of the International Monetary Fund have both identified inequality as a major threat to global stability.

Now a group of prominent Australians has looked at the extent of the problem here.

In Parliament House in Canberra this lunchtime, the former Liberal leader John Hewson is launching a report which includes analysis from more than 30 Australians and is sponsored by the non-profit group Australia21, the Australian National University and the Australia Institute.

The lead author and convener of the group is Professor Bob Douglas. He's the founder of Australia21, an emeritus professor and a visiting fellow at the Australian National University and a former director of the ANU's Centre for Epidemiology and Population Health.

He joined me in our Parliament House studio earlier.

Professor Douglas, you're a health specialist, an epidemiologist, what made you decide to launch this initiative on inequality in Australia?

BOB DOUGLAS: Well, one of the reasons is that health and inequality are inextricably linked. There was in fact a lot of work done when I was still at the National University and there's no question that the more unequal a society, the greater the severity of the health differentials across society.

ELEANOR HALL: We're used to seeing significant wealth and income disparities in countries like the US and recently the IMF and the US president raised it as a major global concern but is inequality a major problem in Australia?

BOB DOUGLAS: Yes, it is. It already is. We're not quite as bad as the US or the UK but we are rising fast and currently in Australia the average wealth of the highest 20 per cent is about $2.2 million whereas the average wealth of the lowest 20 per cent is about $31,000.

When you look at the lowest 10 per cent, it's even more serious. A figure in our report: the lowest 10 per cent have virtually no equivalised household net worth compared with the top 10 per cent who have about 50 per cent of the Australia's net worth.

So we have moved very substantially in the past 15 years from a point of very considerable equalitarianism to a point of marked differentiation.

ELEANOR HALL: What is driving this inequality and this change over the last few decades?

BOB DOUGLAS: Well, there are a number of things. Globalisation has unquestionably had a big impact but there's also been very marked forces operating at the international level on the trend towards smaller governments and big tax cuts which have favoured disproportionately the better off and where the better off have a much greater say in government.

ELEANOR HALL: What do you say to the argument though that a certain degree of inequality is not only inevitable in a free society but that it can be a good thing, it can encourage innovation and energy in a society?

BOB DOUGLAS: Look absolutely, that's been what's driven the disinterest by the policy makers in inequality in the past. That certainly you can't hope for an absolutely equal population. What is generally agreed is that we are concerned about inequality of opportunity and that's what is starting to suffer across the world as the tax cuts to the very rich favour them more than the very poor.

ELEANOR HALL: What do you see as the most damaging aspects of an unequal society on the individuals who live in it?

BOB DOUGLAS: Look, I think the most damaging thing is that it tends to introduce a segmentation of society into classes and the people in the lower classes have less self esteem in relation to those in the upper classes. That self esteem plays out in all sorts of ways but one is in terms of effect on bodily hormones and on self-expression and on involvement in the community. So that an equal society is one in which there is much greater sense of self worth across the society and much greater participation across the society.

ELEANOR HALL: So is this problem of inequality something that you see governments having a major role in addressing?

BOB DOUGLAS: Yes, absolutely. I don't think it's only governments but I think government policy is critical and the Nobel Laureate, the economist Joseph Stiglitz, has repeatedly said this is a choice which governments make - whether to take action on inequality or not.

ELEANOR HALL: The Abbott Government says its first budget is focused on ending the age of entitlement. Does that give you confidence that this government is looking at the bigger picture including issues like inequality?

BOB DOUGLAS: Well, it would if I thought they were looking at the entitlement of the very rich but that's not what they're talking about and I do think that it is time for us to end the age of entitlement for those who are at the very upper segment. That includes me of course and a large section of the upper income group of Australians. I think the very fact that the claim is that this is going to take a greater percentage our of lower income wealth than out of upper income wealth means that it is highly likely that it will exacerbate the problem.

ELEANOR HALL: Now the former Coalition leader, John Hewson is launching your report today in Parliament House. What sort of response are you hoping for from this report and from whom?

BOB DOUGLAS: We held this round table in Parliament House in January where we had 35 experts who agreed that nothing is going to happen about this until the community understands what's going on. So what we are really hoping is that this help to generate a national conversation on the matter and for that reason we think it's important that both sides of the argument are heard, that the conventional view that economic growth prospers from inequality is countered now increasingly by groups like the International Monetary Fund who are saying in fact greater inequality makes a much less efficient economy.

So we would like to see this considered by the Productivity Commission. We would really like to see this become a very central election issue in the next election.

ELEANOR HALL: Now you're taking it right to their doors. What sort of reaction have you had so far from our federal politicians?

BOB DOUGLAS: We did in fact invite every politician in the Parliament to consider participating in the round table and we were disappointed that we didn't have a representation from the conservatives. Nevertheless, I think it's the conservatives who can act on this most readily and most effectively.

ELEANOR HALL: Why is that?

BOB DOUGLAS: Because they are much more closely in touch with business and with the upper income groups who I suspect when they recognise the effect that inequality is now beginning to have across the world, will be open to persuasion.

This is now an issue that should run beyond partisan lines. You do have very conservative groups like the Davos Economic Forum saying this is the risk, the highest of about 32 risks, facing the global economy. Australia, if it wants to be a player in the global economy, needs to address its own inequality and I think Tony Abbott will eventually recognise that.

ELEANOR HALL: That's Emeritus Professor Bob Douglas from the Australian National University who convened the conference which led to today's report into inequality. It's being launched in Parliament House in Canberra today.

The World Today