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Inconvenient advice for a business-friendly prime minister

  • 08 July 2013

One of Kevin Rudd's key points of difference with Julia Gillard lies in his determination to project a business-friendly image for himself and the ALP, which may have something to do with his decision to dump former parliamentary secretary Andrew Leigh from the front bench. Although Leigh was a Gillard backer, he is a former ANU economist who is regarded as Australia's leading inequality expert and unsympathetic to the demands of big business on government.

Coincidentally he has just published a book targeting income inequality, Battlers and Billionaires: The Story of Inequality in Australia. In media interviews during the week, he pointed out that since the 1970s, 'we've seen the top 1 per cent double, we've seen about $400 billion shifted from the bottom 99 per cent to the top 1 per cent. CEO salaries have gone from an average of $1 million to $3 million in the top hundred firms, and we've seen stratospheric increase in consumption in the things the super-rich enjoy, like waterfront homes, Porches, Maseratis, even cocaine.'

When John Howard introduced WorkChoices in 2005, he argued that a prosperous business sector would produce more jobs and benefits for ordinary Australians. Leigh says that while inequality does boost economic growth and the nation's GDP, the increased wealth does not trickle down to those at the bottom to any significant extent. His view is that inequality is socially divisive and demands serious policy attention. 

Increasingly it is recognised as a public health issue, and that it demands a political response. Epidemiologist Robert Douglas ponders the political implications of our comparatively high levels of mental disorder, suicide, lack of trust, mortality, communal violence and teenage pregnancy. 'Could the preoccupation of the Coalition with deregulation of labour markets and market solutions make matters worse? And could the Australian Labor Party, with its traditional concern for equity and redistribution, make things better?'

Other epidemiologists have contributed to the debate, most notably Richard Wilkinson and Kate Pickett in their controversial 2009 popular academic work The Spirit Level: Why More Equal Societies Almost Always Do Better, which was based on a study of the top and bottom 20 per cent of income earners in 21 rich developed market economies. They found that 'bigger income differences lead to bigger social distances up and down the status hierarchy, increasing feelings of superiority and inferiority and adding to status competition and insecurity. Some of the causal links are known: the effects