Research Paper: The Redistribution of Income and Wealth in Australia

The redistribution of income and wealth is the redistribution of income and wealth from richer individuals, who have a higher income and wealth, to people with less within a population. This distribution occurs through the modes of taxation, welfare, and other government spending on necessary utilities and services. In an economy, the government can increase or decrease the amount that is taxed from individuals’ income. When this happens, many factors can change that influence the liveability or living standard in a country. The OECD better life index can measure this. Australia has a top-notch redistribution system, which is ranked at number 3 in the world. This rating shows that Australia is very equal compared to countries with a lower redistribution, such as South Africa and India. Australia is, however, still far away from reaching countries like the US and Luxembourg in this category. Income and wealth redistribution affect the livability and living standards observed in a specific country. Australia is already making changes, which makes it one of the most equal countries in the world on the OECD index. However, Australia can still do much more to equalize the pay gap between rich and poor households in Australia.

The Gini Coefficient measures the distribution of income over a population or group. The Gini Coefficient is a rating between 0 and 1, which shows the inequality between the wealthiest and poorest people in a country. When the rating is higher, the more unequal the income distribution is in that country. Australia’s Gini Coefficient is 0.33, which is just below the OECD global average. By looking at the Australian average of 0.33, contrasting to the global average of 0.3545. We can conclude Australia has a nationwide average, which is more equal than the global average of income distribution. Australia has less equal distribution than countries like Denmark, Belgium, and Switzerland, and has better income distribution than countries like the United States, South Africa, and Brazil. From these figures and statistics, we know that Australia’s Gini Coefficient for income distribution across Australia is more equal than in many other countries in the world. However, Australia still has room to improve on the income distribution, to match the distribution that countries like Belgium and Switzerland have, to increase the redistribution in Australia. There are many other ways of measuring distribution, by looking at income distribution.

Wealth and income distribution in Australia, measures the amount of income that is redistributed from the richer to the poorer people. Income in Australia is redistributed so the income from the richer population, who have a higher income, gets paid to the poorer citizens, through our progressive taxing system. This system has taxing thresholds that decide if and how much tax you will need to pay. From this taxed money the poorer citizens get paid through welfare, and jobseekers, and most of the taxed money goes into government spending on utilities and essential services, to keep the living standards in Australia up. This progressive taxing system ensures that citizens are not over/under taxed, and that all citizens can afford essential needs. According to the progressive taxing key in Australia, the more money earnt by a citizen, the more they would get taxed. In Australia, if you earn over $180, 000 in a year, you must pay $54, 547 and also 45% of your income, over $180,000. However, if you earn under $18, 000 in a year, you don’t have to pay any tax. This allows people with a lower income, pay for essential goods and services they need such as food, shelter, and water. This keeps living standards in the country up too, as there are less homeless people in Australia. The average yearly income in Australia is $67, 860, this means that most citizens will be paying the third threshold of income tax. From this evidence, we know that people on the high income threshold, sacrifice their income in tax, to pay people who earn less. This means that people don’t have to pay tax, and are able to pay for essential G&S they need. All of these points make Australia a very equal place to live, as income is distributed, so all people can pay for the G&S they need, but Australia can still increase the thresholds, so that there are less homeless people, and people can pay for things that they need to stay alive. Another thing that Australia could do to help, would be to ensure that earnings from job keepers and welfare are spent on items that citizens need, and not so much on things that are desirable as a comfort.