Sydney has emerged as Australia’s most unequal major city with the richest 1 per cent of earners snaring more than 11 per cent of all the income.
Huge economic disparities have also been revealed in some of Sydney’s most exclusive harbour-side suburbs by new small area income distribution figures published by the Bureau of Statistics.
In Double Bay, Bellevue Hill, Rose Bay, Vaucluse and in the city’s central business district more than 22 per cent of all income goes to the top 1 per cent of earners. The Redfern-Chippendale area also ranked among Australia’s most unequal neighbourhoods with almost 19 per cent of the area’s combined income accruing to the top 1 per cent.
The top 1 per cent of earners in NSW received 10.5 per cent of the state’s income in 2012-13, the highest proportion among the states and territories. The top 10 per cent of earners in NSW are also reaping a bigger share than their counterparts elsewhere. They accounted for 34.9 per cent of all the state’s income in 2012-13 compared with 33.7 per cent nationally. In the Sydney the proportion earned by that group was even higher at 36.2 per cent.
Debate about the long-term consequences of inequality has intensified recently in the wake of high profile research showing the proportion of national income accruing to the richest 1 per cent has risen steadily since the early 1980s in many developed countries like Australia. While Australia’s top 1 per cent of income earners has a smaller share of national income than their counterparts in the US, the trend is similar.
Research by Labor MP and former economics professor Andrew Leigh shows that the income share of the top 1 per cent has doubled and the share of the top 0.1 per has tripled over the past three decades.
“Inequality is one of the big economic issues of our age,” he said. “The richest three Australians now have more wealth than the poorest 1 million. Inequality not only challenges the fair go; it also makes it harder for a child born into poverty to make it into the middle class. At a local level, we also have strong evidence that people in unequal neighbourhoods are less happy.”
The bureau’s analysis included a Gini Co-efficient – a broad measure of inequality – for Australia’s states and smaller regions. This coefficient summarises the distribution of total income in a single number between 0 and 1, where zero means everyone has same income and 1 means a single individual has all the income. NSW had the highest Gini co-efficient of 0.491 meaning greater income inequality than all other states. The bureau also calculated a Gini-efficient for each of Australia’s neighbourhoods. The local area with the highest number – meaning the greatest inequality – was Rose Bay-Vaucluse- Watsons Bay in Sydney’s eastern suburbs.
There was a marked difference in the distribution of income in Sydney compared to the rest of NSW. In the Greater Sydney region 11.5 per cent of all income went to the top 1 per cent of earners in 2012-13 but in regional NSW the proportion is only 7.4 per cent.
ACT had Australia’s smallest income share going to the top 1 per cent – just 6.4 per cent of the total.
The bureau noted that income that tax-free income, including some income streams from superannuation, were not included in the analysis. Government pensions and allowances were also excluded.
Balmain had NSW’s highest proportion of people receiving more than $75,000 per year – 48.2 per cent of all earners. It also had the state’s highest total median income of $72,591. But that was well short of the median in Ashburton, a mining region in the north of Western Australia. It recorded Australia’s highest median total income of $93,902 in 2012-13.
Nationally, the median income was $44,940 in 2012-13 and the average was $58,389. Employee income (from full-time and part-time work) accounted for almost 78 per cent of all personal income followed by investment income (12.4 per cent) and income earned by unincorporated businesses (7.5 per cent). The ACT had the highest median total income of $58,613 while Tasmania had the lowest at $43,524.
Toorak in Melbourne’s inner-east had the highest proportion of people whose main source of income were investments (40.9 per cent) followed by City Beach in Perth (37.8 per cent) and Rose Bay-Vaucluse-Watsons Bay in Sydney’s east (36.7 per cent).