Labor trades on myths of inequality

by David Leyonhjelm

Every morning when we look in the bathroom mirror we are reminded that life is not fair or equal.

If I was a proselytiser for equality I would demand the bloke who sits behind me in the Senate give up his unfair share of hair. Derryn Hinch has far more than he will ever need and I have none. But then again, he may demand something he is lacking in return, and I value my fully-functioning liver. That’s the problem with inequality; we’re surrounded by it. And it’s fine political fodder.

We will hear a lot about inequality in coming months. Labor believes election victory can be achieved by waving the banner of inequality. Echoing the rhetoric of Bernie Sanders and Jeremy Corbyn, Bill Shorten recently claimed in a speech that rising inequality was the single biggest threat to Australia’s social cohesion and the economy.

Now I can’t help noticing how many people have hair, and sometimes it seems their numbers are growing, unlike my hair. But increasing economic inequality? That’s just not true.

The Survey of Income and Housing from the Australian Bureau of Statistics shows income and wealth inequality have remained relatively stable over the past 22 years. In fact, largely thanks to sustained economic growth over this time, significantly improved living standards have been achieved for Australians in every income decile.

The ABS’s findings, released late last year, were recently backed up by a Productivity Commission report that similarly found income gains had been widely shared across all income groups since the 1990 recession. Productivity Commission chairman Peter Harris said that those with the least income have done as well, if not slightly better, than most.

It’s a similar picture elsewhere in the world, although Australia is more equal than most. Among 28 OECD countries, Australia ranks eighth most equal based on the Gini coefficient of wealth, a well-accepted measure of inequality.

Australia also recently overtook Switzerland for having the highest median wealth in the world, according to Credit Suisse’s 8th Global Wealth Report. Median wealth in Australia — the wealth of the middle Australian if every one of us was lined up in a row according to our wealth — is about $270,000 after taking into account income, property assets, superannuation, debt and other liabilities.

Focus on equality of opportunity

So why the incessant claims of rising inequality from leftist politicians? Why has Labor’s Shadow Treasurer, Chris Bowen, declared that income inequality in Australia “at a 75-year high”. Labor is misrepresenting historical data on the income share of the top 1 per cent of taxpayers in order to play on the genuine concerns of Australians about stagnant wage growth, inflated house prices and soaring energy bills. For the many who are feeling the pinch, it’s easy to think the cards are stacked against them. But that does not demonstrate inequality (and neither does the historical data on our top taxpayers).

Our focus should be on equality of opportunity — access to education and employment regardless of gender, race or socioeconomic background. It’s also about equality before the law, so that the same rules apply irrespective of your wealth.

At a rate of more than 60 per cent, my ancestral home of Sweden has the highest personal income tax in the world. For that price every Swede gets government paid healthcare, childcare, tertiary level education and unlimited leave, including sick leave, at 80 per cent of full pay.

Yet despite being one of the healthiest countries in the world, Sweden has one of the longest hospital waiting queues in the developed world, and one of the highest rates of sick leave in Europe. Just over two thirds of young people are not engaged in the type of tertiary-level education their high taxes are paying for, and the most common household in Sweden is a single childless adult, unlikely to avail themselves of free childcare.

In Australia we admire those with a natural talent, in the fields of sport, the creative arts and entertainment. Few Australians resent a Miranda Kerr or Elle McPherson for being unfairly blessed at birth with the genetics that enabled them to become multi-millionaires as adults.

So I am determined not to resent the genetics that deemed my fulsome mop of hair in my twenties would desert me some three decades on. Instead, I will take my lead from Mr Aristotle, who pointed out that the worst form of inequality is to try to make unequal things equal.

David Leyonhjelm is a NSW senator for the Liberal Democrats.

First appeared in the Australian Financial Review 06/01/2018