A snapshot of inequality in Australia
Research paper
This paper provides an update on the state of economic inequality in Australia, reviewing the period of the COVID-19 induced recession and recovery. It also deep dives into economic inequality for three cohorts:
inequality-snapshot.pdf (PDF 1.2 MB)
inequality-snapshot.docx (DOCX 8.2 MB)New research provides a snapshot of inequality in Australia
New research from the Productivity Commission has unpacked changes to income and wealth levels during the COVID-19 pandemic.
“The initial pandemic period saw an unprecedented decline in income inequality. The incomes of lower-income households grew rapidly in relative terms in the early stages of the pandemic, due to the massive increase in support payments from the Government,” said Commissioner Catherine de Fontenay.
“Income inequality increased later in the pandemic period as the economy recovered and government support was phased out.”
The report also finds that wealth inequality fell across the pandemic period.
“Some lower-income Australians were able to save or reduce debt due to early government support. And although house prices soared during the pandemic period, the strongest price increases were in regional areas where house prices are lower. This all had the effect of reducing wealth inequality,” said Commissioner de Fontenay.
The report examines three cohorts in closer detail: older people, women, and Aboriginal and Torres Strait Islander people.
The report finds that while older Australians have relatively low incomes compared to working age Australians, many have significant wealth they can draw on to fund their spending.
“When you look at wealth and income together, older Australians are doing better on average than younger Australians,” said Commissioner de Fontenay.
The report also examines gender differences in income and wealth. It finds that women still have lower income than men at all levels of the distribution, but that the share of women at the top of the income distribution has increased.
“We are seeing some improvements in the income gap between men and women consistent with an increase in women’s workforce participation and a declining gender pay gap,” said Commissioner de Fontenay.
The gap between the average incomes of Aboriginal and Torres Strait Islander people and the Australian average income narrowed slightly early in the pandemic before widening in 2022.
“Economic measures provide only a partial indicator for overall wellbeing. This is a particularly significant consideration in the case of Aboriginal and Torres Strait Islander people, for whom wellbeing encompasses cultural identity, community connections and other measures of quality of life,” said Commissioner de Fontenay.
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- Preliminaries: Cover, Copyright and publication detail, Contents and Acknowledgements
- Executive summary
- 1. Why investigate economic inequality in Australia?
- 1.1 What is economic inequality and why examine it again?
- 1.2 How to measure inequality – a policymaker’s toolkit
- 2. Recent changes to inequality in Australia
- 2.1 Income inequality
- 2.2 Wealth inequality
- 2.3 Measures of potential and actual consumption
- 3. Income, transfers and consumption capacity by age
- 3.1 Variations in income and transfers across age groups
- 3.2 Measures of potential and actual consumption suggest less inequality between age groups
- 4. Income, transfers and wealth components by gender
- 4.1 Income snapshot by gender
- 4.2 Gender differences in transfer payments
- 4.3 Men tend to have more assets and debts than women
- 5. Inequality for Aboriginal and Torres Strait Islander people
- 5.1 Wellbeing encompasses more than income
- 5.2 Changes in income during the pandemic
- 5.3 Geography matters for Aboriginal and Torres Strait Islander incomes
- 5.4 Age and gender inequality within Aboriginal and Torres Strait Islander incomes
- Appendix: Inequality measures and data sources
- A.1 Equivalised measures
- A.2 Calculating income
- A.3 Data sources
- References
Printed copies of this report can be purchased from Canprint Communications.
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- Despite a long history of policy attention, no consistent improvement has been made in the literacy and numeracy achievement of Indigenous Australian primary school students.
- A better evidence base and understanding of how to improve the literacy and numeracy achievement of Indigenous students is needed to improve policy outcomes.
- Access to newly available national data linking student achievement and demographic characteristics with school characteristics permits analysis of a subset of the characteristics thought to be associated with education achievement.
- Analysis of these data shows a wide variation in literacy and numeracy achievement among both Indigenous and non-Indigenous primary school students. But Indigenous students are over-represented among low achievers, and under-represented among high achievers.
- Disparate achievement between Indigenous and non-Indigenous students is also widespread geographically. While greatest in more remote areas, differences also manifest in metropolitan and provincial areas where most Indigenous students attend school. For example, in 2014, Indigenous students in non-remote areas accounted for 55 per cent of the national gap in reading achievement between Indigenous and non-Indigenous year 5 students.
- Achievement disparities remain even after other observed characteristics of students and their schools are taken into account. The reasons for this result are unclear.
- The well-established result that socioeconomic background explains more of the variation in literacy and numeracy achievement than any other characteristic observed in the dataset is confirmed for Indigenous and non-Indigenous primary school students. Other important factors include the general socioeconomic background of students attending a school and, for Indigenous students only, the average school attendance rate and the proportion of Indigenous students in a school's enrolment.
- However, characteristics observed in the dataset explain less than one third of the total variation in student achievement. Most of the unexplained variation is due to differences between students (rather than between schools).
- This meshes with findings from the broader education literature — emphasising that children have individually different learning needs — not readily categorised according to demographic characteristics. The literature suggests that the key to improving achievement, for all students, is individualised instruction.
- For Indigenous students, the evidence suggests that a culture of high expectations in schools; strong student-teacher, and community, relationships; and support for culture are also particularly important — all underpinned by strong school leadership.
- Policy development also needs to be informed by context, especially that many Indigenous students attend schools with few other Indigenous students. Arguably, quality teaching will be especially critical to these students in the absence of some forms of support better suited to students in schools with larger Indigenous enrolments, for example, Indigenous education workers.
- The analysis suggests some schools are punching above their weight — Indigenous students do considerably better than might be expected given their characteristics and those of the school they attend.
- Insights from systematic evaluation of high (and low) achieving schools could shed light, in a cost effective way, on what works best to lift achievement of Indigenous students.
