|Marat’s dream. Image by Webdiary artist Martin Davies. www.daviesart.com|
Rising inequality presents a real threat to our collective well being, not just to the well being of those who are missing out. Rising inequality, especially in a society accustomed to seeing itself as fair, creates a nagging sense of unfairness and threatens social solidarity and stability. It undermines the perception that we are all equal. It can lead to bitter divisions and increase the psychological and social distance between the haves and the have nots. As James K. Galbraith pointed out, it can cause “the comfortable to disavow the needy” and it becomes easier to persuade people – as this government is trying to do – that defects of character or culture rather than economic history cause the gap.
As a member of the Labor Party, I have always been passionately committed to egalitarianism – the idea that each person has equal worth; that any limitations on their achievement and their ability to share in society’s goods should be systematically broken down. And that this requires public action and investment.
The conservatives embrace – if they do at all – a pallid version of equal opportunity. They think it is enough to let people step up to the mark and do as well as they can no matter what handicaps they start with. They speak from the vantage point of privilege, blind to their own advantages. They fail to understand that promoting equal opportunity actually requires active intervention to minimise disadvantage and ensure that people’s life chances are more equal, so that the accident of your birth does not cripple your future.
Most Australians still hold firm to the view that ours is an egalitarian society. Indeed, some who argue that egalitarianism is the value that defines us. While more of us are uneasy about the widening income and wealth gaps we see, many still appear to accept the boast made by our leaders that ours is a nation of equals where the ethic of a “fair go” is the norm governing our private and public relations. But is this really so?
There is now a great deal of evidence which challenges this comfortable assertion. While researchers may disagree about the extent of the problem, they generally agree that inequality amongst Australians is increasing and that egalitarianism itself may be under threat as a defining social objective. And they all agree that it matters.
I was recently asked to review three new books on the subject of inequality and poverty and was struck by the fact that, although they use different data sources and levels of analysis, all three reached the same conclusion. We are a less equal society than we have ever been. (See Fred Argy, Where to From Here? Australian Egalitarianism Under Threat, Sydney: Allen & Unwin, 2003, Mark Peel, The Lowest Rung: Voices of Australian Poverty, Cambridge University Press, 2003, Michael Pusey, The Experience of Middle Australia: The Dark Side of Economic Reform, Cambridge University Press, 2003.)
Fred Argy points out that Australia’s distinctive form of egalitarianism evolved over 70 years, and was defined by its advocacy of a strong role for government in advancing human wellbeing.
The historic roots of our egalitarian ethic lie in a pragmatic commitment to sharing the wealth of the country and the benefits of productivity, particularly through the award and wage fixing system – the “wage earners welfare state.” One of the features of this “settlement” was a recognition that government could be – and should be- a major player in achieving equality. Argy details “seven pillars” which were deliberately created by government action:
* the virtual guarantee of full-time employment,
* the protection of wages and conditions of workers,
* an unconditional needs-based welfare safely net,
* a strongly progressive tax system,
* generous government provision of non-cash benefits such as education, health and housing,
* a balanced distribution of regional economic opportunities and
* the capacity for workers to be involved in workplace decisions affecting their wellbeing.
Argy’s systematic analysis of the extent of erosion of these pillars and the reasons for the decline he identifies makes sobering reading.
Various data on Australian incomes show a widening gap between citizens. Stephen Long observed in 1998 that a map of Australia depicting the distribution of income and employment would show “a nation fracturing along class, residential and ethnic lines” (Australian Financial Review, October 24-25). The gap is not just between the rich and the poor, but between the rich and the rest of us.
The National Centre for Social and Economic Modelling calculated that in 1990 the richest 10% of Australian families received 23% of the national income (up 1.7% from 1982) while the poorest 10% received less than 3% (down 0.2%).
Income movements are reinforcing these differences. Between 1993-4 and 1998-9 the 2.2 million Australians in the lowest 20% received an average weekly increase of $9 (5%) while the top 20% received $343 ( 23.4%). Similarly, Natsem has reported that the number of low-wage earners doubled between the mid-1980s and the mid 1990s and that over the last decade, especially since the mid-90s, income inequality has been increasing.
Despite our myth-making, Australia also has relatively high levels of inequality by international standards. Incomes after taxes and transfers (benefits, rebates etc) are more unequal in Australia than in all but a few of the OECD countries (OECD, 2001), pointing to a tax/transfer system which is less effective than other developed nations. As Argy points out, while Australia has a relatively progressive tax system, it actually spendsless on redistribution than other countries.
Australia has even greater disparities in wealth, with the top 10% owning 52% of the nation’s wealth. Since 1993, the share of the nation’s wealth held by the richest 10 per cent has increased by almost five percent. The increase since 1996 has been even more concentrated. The richest 1 per cent increased their share of wealth from 12-15% and this has been made at the expense of those on middle incomes.
Inequality has many different faces apart from those captured by aggregate figures on income and wealth distribution. There are substantial inequities in Australians’ working lives, reflected in lengthening working hours for some and too little work for others, fewer full time jobs, unequal job opportunities, greater job insecurity and increasing numbers of long-term unemployed and marginal and discouraged job seekers.
As well, Australian workers have not received their fair share of the rapid productivity growth of the 1990s and the dispersion of income has become more unequal. Earnings have grown much faster for managers and those in professions and trades than for labourers, clerical and service workers. It is an affront to our egalitarian values that CEO and senior management earnings have grown at ten times the rate of award pay rates over the last decade producing a current ratio of 20:1, a figure exceeded only by the United States.
Egalitarian values are also under threat in the welfare system, in the declining progressivity of the tax system and in reduced non-cash benefits which flow from expenditure on health, education and housing.
And it is not simply a matter of inequality, but also of rank poverty. While it might be unfashionable to draw attention to poverty in Australia, it exists and causes great distress to those affected. While poverty in an affluent society such as ours does not have the same meaning as it does in many parts of the world, some Australians have so little that they cannot afford the basic goods and services the rest of us take for granted.
Accounts from people living on low incomes given to the Brotherhood of St Laurence reveal recurring themes of difficulties in meeting essential costs such as rent, food and electricity, stress in family relationships and a sense of social isolation. Social and recreation needs are rarely accommodated.
This month, Uniting Care Australia urged us to accept that all Australians are entitled to a decent life, in which they have access to work, education, housing, food and recreation. They also reminded us that a significant minority of Australians lack such a decent life.
Does Inequality Matter?
All this is doubly important because societies which have the greatest differentials in wealth and income are also the most unequal in access to other resources, including power and influence.
Societies with greatest income inequality are also the most likely to discriminate against minorities and to limit universal access to public goods, such as education and health services. The greater the inequality in wealth, the greater the social distance between citizens.
It is also typically more difficult for the least well off to move up the ladder and “elites” are more likely to exercise control and to dominate key positions of power. Inequality undermines social cohesion and weakens the bonds of co-operation. It makes democratic citizenship more difficult because some people are denied the resources – education, money and time, in particular – which are essential to exercise our democratic rights.
Rising inequality presents a real threat to our collective well being, not just to the well being of those who are missing out. Rising inequality, especially in a society accustomed to seeing itself as fair, creates a nagging sense of unfairness and threatens social solidarity and stability. It undermines the perception that we are all equal.
It can lead to bitter divisions and increase the psychological and social distance between the haves and the have nots. As James K. Galbraith pointed out, it can cause “the comfortable to disavow the needy” and it becomes easier to persuade people – as this government is trying to do – that defects of character or culture rather than economic history cause the gap. (Created Unequal: The Crisis in American Pay, New York: The Free Press, 1998)
Conversely, economic equality makes people feel similar to others and more likely to identify with them. The more inequality there is, the greater the awareness of one’s position and the more acute the knowledge about whether one is a loser or a winner; while the rich may feel more secure, the poor become less hopeful.
There is also a clear danger that increasing gaps may weaken the willingness of those who have to share by concentrating more and more resources into hands less inclined to be willing. This tendency threatens the ability of the society to provide for the weak, the poor and the old and sparks bitter debate about welfare payments and other benefits which go to the most disadvantaged. Inequality is accompanied by increasing pressure to withdraw resources from the public to the private domain – a deliberate policy drive under the current government.
Many have argued that growing inequality is likely to lead to a two tiered society where the wealthy live lives which are fundamentally different from those on low and middle incomes – an “apartheid economy”. Even Alan Greenspan sees unequal incomes as “a major threat to security”, a pretty miserable reason for addressing the problem. Work on “social exclusion” and “the culture of poverty” illustrates how readily people can be trapped in a cycle of disadvantage and poverty across generations, attracting further scapegoating and marginalisation.
More broadly, there is burgeoning evidence that unequal communities have poorer health, poorer education outcomes and rising crime rates compared with more equal communities. A joint Adelaide University – Commonwealth Government publication, The Social Health Atlas of Australia, reports a growing divide between the wellbeing of the richest and poorest Australians which mirrors the growing income divide.
Simultaneously with the “loosening up” of economic controls and the resultant growth in inequality, social control has intensified. The parallel development of laissez-faire policies in the market place and increasing social control have been noted by a number of commentators and is increasingly evident in the rhetoric and policies of the current government.
Education and Equality
There is little dispute that the universal provision of quality education is one of the keys to reducing inequality and enhancing people’s opportunities to participate in the economy and the society.
In the first instance, public expenditure on education operates as a so-called non-cash benefit, like services in health and housing, and has an equalising effect on after-tax income distribution. Assistance to families in the form of government-subsidised services increases the income families have to devote to other consumption.
These benefits are particularly important for Australians in the bottom thirty per cent, increasing their after-housing final income by at least 30%. Recent social policy changes have wound back some of these benefits with a resultant reduction in these redistributional effects. During the 1990s, the distribution of such non-cash benefits became more skewed towards higher income households. This can be attributed in part to reduced spending, relatively speaking, on public goods.
While there are few current data available, the most recent UN Human Development Index, a composite measure of GDP per capita and health care and education indicators, reveals that we have dropped from 7th to 15th place on the league table.
Education is also vital in improving life chances and reducing inequality in the long term, particularly by improving access to employment and conferring higher income earning capacity. It also opens people’s lives to enriching and enjoyable experiences.
Over the last 50 years, Australia has had a strong commitment to a high quality public education system. Under this government, that commitment is being undermined.
By international standards, Australia still has average to high standards of education (OECD 2002) but there is substantial educational inequality. And at least part of this inequality can be attributed to the education levels, occupation and income of students’ parents. Indigenous students and those from rural areas are particularly disadvantaged. Gifted students from poorer families are less likely to achieve their full potential.
It is clear that students from poorer families start behind the eight ball and are not given enough extra assistance to overcome things such as:
* poor study conditions at home;
* less encouragement by parents whose own experience of schooling has been marred by low achievement;
* language and cultural barriers;
* absence of books and other educational resources at home;
* attendance at schools with poorer facilities, a more diverse school population including more children with behavioural and social problems and teachers working under pressure; and
* lower expectations of their capacity.
International comparisons show bigger gaps between the best and the worst performers in Australia than in other developed counties. OECD data confirm that on measures of literacy, the poorest performing students here do worse than the poorest performing students in high ranking countries, including most of Europe. And the relationship between reading ability and social background is also more marked in Australia. We are one of the least equitable countries in the developed world. This points to inequalities in the functioning of our education system and a failure to compensate for pre-existing disadvantage.
Investment in public education rose impressively during the 1970s and 1980s. There are signs that this effort is stalling. For example, in the 70s 5.6% of GDP was spent on education, a figure which had been reduced to 4.5% by the end of the 90s, despite significant increases in education participation. Our spending on the all important pre-school years is low by world standards and there are too few early intervention programs for at-risk families.
Until recently the participation rate of lower socio-economic groups in post-compulsory schooling, including universities, was increasing. School retention and completion rates, after growing rapidly, stalled in the 90s and our levels are now well below those of the U.S. and Canada.
Of more concern is the failure to close the socio-economic gap in performance and retention, especially for males. The gap may, indeed, be widening. A similar trend to lower participation is evident in vocational education and training for the most disadvantaged.
As many commentators have argued, one reason for this gap is the increasing advantage enjoyed by non-government schools which educate the better off. In the thrall of narrow fiscal ideology and reduced grants from the Commonwealth, successive State governments have restricted funding to their schools. Simultaneously, the Howard Government has poured money into the wealthiest private schools at the expense of the government school sector.
Between 1995-6 and 2001 the Commonwealth cut the Government school sector’s share of funding from 42.2% to 34.7%, although the enrolment share declined only 1.9%. As a proportion of GDP, expenditure on the government sector was static while it increased by 21.6% in the non-government sector. Federal Government funding for non-government schools ballooned from $3.36 billion last year to an estimated $4.74 billion in 2004-05.
Ken Davidson has estimated that “total public and private expenditure on state school students will be $2000 a year per capita less than for non-government school students s by 2005,” a figure which other analysts describe as conservative (The Truth about Dr Nelson’s Uni Reform, The Age, 25 May 2003). Some have estimated average gaps as wide as $4000. When Catholic schools are excluded, the National Report on Schooling reports that the ‘independent’ schools are about 26% higher than the average for non-government schools – a difference of between $5,500 and $7,500 per student.
Some of the wealthiest schools operate with 200% of the resources available in government schools. The Government’s funding policies and the SES funding formula are major contributors to this reverse discrimination. Give most to those who have most; take from those who have little.
Such disparity in resources will almost certainly lead to even greater inequalities in performance. Instead of front-end loading the schools who deal with the most disadvantaged and systematically assisting those most likely to benefit from extra expenditure, the government provides derisory amounts to support literacy and numeracy programs. Last year, for example, they spent $115 million on advertising, while the current budget commits just $7 million for grants to foster literacy and numeracy.
In June last year, Ken Boston former head of Education in NSW, argued passionately that Australia urgently needs to debate and resolve some fundamental questions about the future of school education, particularly its inherent unfairness to the less well off:
Do we want to educate our children mainly in government-assisted fee-paying private schools, based on an exclusive clientele identified by socio-economic status, religion, ethnicity or some other dimension? Or do we want them mainly to be in inclusive government-funded public schools, mixing with children from a wider range of backgrounds and experiences?
We need to debate whether education should be something we purchase, like soap powder or a public good, for which we all take responsibility through our governments.
Boston makes a compelling case that “choice”, an ideology which the Howard government gives precedence over equality, should never be based on the fact that government schools are underfunded. In his view, and mine, the “overriding priority of national and state governments should be to provide universal access to first-class public education while respecting the right of parents to choose non-government schools and supporting them on the basis of need.”
John Ralston Saul argued that education is the “single most important element in the maintenance of a democratic system”.
The better the citizenry as a whole are educated, the wider and more sensible public participation, debate and social mobility will be. Highly sophisticated elites are the easiest and least original thing a society can produce. The most difficult and the most valuable is a well-educated populace.
As a former Education Minister and university lecturer, I am convinced he is right. Mass public education is costly, but citizens of modern societies have been willing to pay these costs because they have been convinced it is in the public interest; that there are public as well as private goods.
Surveys over the last few years show that whereas 20 years ago a high rate of economic growth, a stable economy and strong defence forces were considered the most important priorities for the country, today’s top priorities are:
(a) ensuring everyone has access to a good education,
(b) providing a quality life for our children, and
(c) providing quality health care for everyone
The same research reveals that preventing the gap widening between rich and poor was more important to the citizens of the 90s than increasing their own standard of living. They seemed willing to share.
Investment in public education is now under challenge and resources are stretched to the limit. Australian public education has been affected by the systematic attempts to undermine the “welfare state” – “the revolt of the rich”, as Galbraith called it.
Schools can either perpetuate or redress disadvantage. They work daily with young people who are disadvantaged in various ways and they are also a crucial means of reducing such disadvantage. Schools must work with disadvantaged students to offset the practical, psychological, cultural and economic impediments to their education. They must also seek to confront the complex social causes of inequality. They need resources for both of these tasks and the necessary commitment. The entire nation’s well-being is in jeopardy when young people are not able to participate fully in education or when their schooling is narrow and unsatisfying.
Inequalities in education persist: inequalities in retention, access, performance and subject choice. Most of these are linked to socio-economic status, gender and race. There are signs of a regeneration of income-based inequalities in education. And there are trends in current education policies which may exacerbate rather than alleviate the problems: higher funding levels for private schools at the expense of government schools, mainstreaming of “disadvantaged schools” programs, privatisation and commercialisation of public education, more standardised testing, more rigid and formal curricula and a narrow view of academic standards and basic skills.
In the past our inclusive public school system helped reduce inequality; now education appears to be reinforcing privilege and making it even harder for the kids of poorer Australians.
The trends toward inequality in our schools and our society are not inevitable and can be modified by sound public policy. Measures which improve the economic status of the least well off, increase employment, reduce inequality and “civilise” the workplace are likely to produce significant improvements in community outcomes. Conversely, passivity in the face of the “inevitable” consequences of market liberalisation is certain to lead to unnecessary and significant social dislocation.
It’s all a question of what we are prepared to do.