In 2020, Australians may have been, at least ostensibly, “all in this together”. A war-like national mobilisation increased social solidarity, and the federal government reluctantly improved our paltry, patchy welfare state.
Yet we enter 2021 as a society marked by deepening economic cleavages between the haves and have-nots.
Government assistance to the poor is drying up, as is the sense of uncertainty and restraint among the wealthy. New Year’s celebrations were thus tainted with a Gatsby-like hue.
Some Aussies splurged their “COVID savings” with unprecedented zeal after a glum winter. For others, January 1 meant something entirely different: the day their welfare payments were slashed for the second time since their early-pandemic expansion.
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While we might technically have left the corona-recession in yesteryear, the lingering effects are likely to “turbocharge” the rich-poor divide.
How unequal was Australia’s economy before the pandemic?
In a word: very.
A report by the Australian Council of Social Services and University of New South Wales found the incomes of the top 20% of Australian earners were six times higher than those of the lowest 20%. The gap widened since 2015-16, when top earners raked in five times more.
The report also found the richest 10% of households owned nearly half of Australia’s private wealth. The “comfortable middle” 30% commanded roughly 38% of wealth, while the lowest 60% owned just 16%. The latter tends to be younger, owing to the growing generational disparity in home ownership.
What did the pandemic do to inequality?
Despite causing the deepest recession in 90 years, the pandemic forced action to temporarily improve inequality. The raising of JobSeeker lifted hundreds of thousands of the most disadvantaged Australians out of poverty, in one of the steepest improvements in recent Australian history.
What governments and NGOs struggled for decades to achieve with more complex and onerous interventions was achieved overnight by simply giving the poor and vulnerable more money.
But the government cut the $550 per fortnight coronavirus supplement to $250 in September, despite most economists telling them not to. This pushed over 370,000 recipients back into poverty, according to The Australia Institute.
On New Year’s Day, the supplement was again cut by $100 a fortnight, prompting further concerns from recipients, the social services sector and economists.
The late-December determination by Minister for Social Services Anne Ruston also confirmed the supplement will end altogether in March and cannot be extended again, completing the total clawback of the government’s temporary welfare increases.
What happened to the rich?
They initially tightened their belts as the virus spread, with many stuck in lockdown and concerned about the future.
Their neighbourhoods initially experienced rising unemployment. This was sometimes portrayed as elite suffering, but it was likely due to job losses among a substantial minority of low paid workers, particularly those in entertainment and hospitality, who live in high-rent suburbs due to proximity to their workplaces. They may soon be forced to move, solidifying the gentrification of inner-city areas.
Many middle- and upper-class people working from home also accrued unprecedented savings during the pandemic, as they were unable to spend on restaurant meals, overseas holidays and other luxuries.
The super-rich also did very well from investments, as the stock market increasingly diverged from the real economy. Indeed, the Bloomberg Billionaires Index recorded that the combined wealth of Australian billionaires rose by more than 50% during 2020, after dropping briefly in March.
Now the wealthy and those with savings are splashing cash with renewed abandon. Batten down your fine wines and cheeses.
Whatever happened to Australia’s classless society?
Australia is meaner than most in returning to pre-pandemic levels of welfare support so soon. Even the US narrowly averted a full cessation of enlarged welfare support when the president belatedly signed an extension bill, a few days after millions stopped receiving their cheques.
This isn’t the first time our government has led the world in frugalness. After the Great Depression, our last mega-recession, Australia remained unique among Western nations in worrying excessively about the cost of the response, and thus relegated thousands to impoverishment.
Today, we have again rushed prematurely to parochial stinginess.
Summer holidays, benders and shopping sprees are about to look more gilded age than we’re used to.
Is Australia prepared for its new age of inequality? Let us know your thoughts by writing to email@example.com. Please include your full name to be considered for publication in Crikey’s Your Say section.