May 2, 2012
Elite … mining magnate Gina Rinehart. Photo: Claire MartinTHE barons are back. Clive Palmer, Gina Rinehart and Andrew ”Twiggy” Forrest are part of an enduring Australian tradition.
Despite believing ours to be an egalitarian nation, a ”super-rich” elite has been a prominent part of our social and economic life since the early 20th century, according to former economics professor and federal Labor MP Andrew Leigh.
Addressing the Sydney Institute last night, Mr Leigh said that for only about four decades from 1940 to 1980 could Australia be regarded as egalitarian.
Baron … Clive Palmer has also made his billions through mining. Photo: Glenn HuntAfter an examination of tax records going back to 1910, he said ”the thing that strikes you first is that for all the legends of egalitarian bushmen, early 20th century Australia was a strikingly unequal place”.
Large fortunes were made in the early 20th century and many of the super rich lived extravagantly. Retail merchant Samuel Hordern raced yachts and bred racehorses. Goldmining magnate Walter Hall was a racehorse owner and collected old masters paintings. Other super rich of the era included newspaper magnate David Syme, pastoralist Samuel McCaughey, union-busting manufacturer Hugh McKay and retailer Sidney Myer.
In the 1910s and ’20s, the richest 1 per cent of Australians had 12 per cent of national income. And the richest 0.1 per cent had 4 per cent – 40 times their proportionate share.
But the collapse of the super rich began in the 1950s, when the share held by the top 0.1 per cent fell to 2 per cent. By 1980, under prime minister Malcolm Fraser, the super rich held only one-quarter of what had been theirs under prime minister Billy Hughes in the 1920s.
”There are many things about the 1950s and 1960s that we would not want to keep but one value worth trying to reclaim about that era was the sense of egalitarianism,” Mr Leigh said.
The rise of inequality – and the resurrection of the magnates – was first felt in the 1980s with the rise of Rupert Murdoch, Kerry Packer and Alan Bond and in the 1990s with Frank Lowy, Richard Pratt and Harry Triguboff.
Since 1980, Australia has had 13 per cent of household income gains go to the top 1 per cent, Mr Leigh said. Ten people on the latest BRW rich list would qualify for the all-time 200 Australian rich list. No one from the decades from 1940 to 1980 would have qualified.
He said the rise in inequality was driven by the IT revolution that created superstar professionals, the collapse in union membership and cuts to top tax rates. Targeted welfare, better education for the disadvantaged and progressive income taxes were the best tools to tackle inequality.
He said too much inequality strained the social fabric and entrenched poverty.
”Australia is a stronger nation when we act together than when we pull apart,” he said.
An edited version of Andrew Leigh’s speech is on the National Times website.
gerry's blogistic digression 