Rich-poor gap grows only in Bill Shorten’s narrative

Society is unequal and always has been, but the gap between rich and poor has actually been getting narrower, contrary to the rhetoric of everyone from the Labor Party to the International Monetary Fund.

Bill Shorten vowed following Labor’s weekend by-election victories: “We promise to put fairness back into the centre of national life and to fight inequality all the way to the next election”. Inequality and fairness have provided a rich vein for the Labor leader ever since Tony Abbott’s ill-fated budget in 2014. It provides both the narrative to contrast Labor with the Coalition and the rationale for a raft of tax policies, including higher taxes for high-­income earners and larger businesses as well as hikes for investors in shares, property, trusts and capital gains more generally. “Inequality kills hope,” Shorten says. “It feeds that sense — that resentment — that the deck is stacked against ordinary people, that the fix is in and the deal is done.”

In reality, it is Shorten who is feeding the sense that the fix is in. Pointing to the inequality that has always been there, he is fostering a new resentment.

Inequality of income is lower now than it was at the beginning of the 2000s and has been declining notably over the past decade.

That narrowing has been occurring at both ends of the income spectrum, with low-income earners gaining more and high-income earners gaining less. Fewer people are struggling, as shown by a fall in the number who say they have had to delay paying household bills dropping from 18 per cent to 11 per cent over the past 15 years.

Melbourne Institute professor Roger Wilkins says there may be different trends at the very pinnacle of the income spectrum — the top 0.1 per cent or top 1 per cent, among whom capital income is more important than wages.

But he can uncover no evidence of a burgeoning underclass toiling in hardship as the rich bask in their plenty.