Income data shows Australia has avoided the ‘American disease’ – for now
As seen on SBS News, May 2 2017
Australia has managed to avoid the “American disease” of income inequality between urban and rural areas, according to the head of the Regional Australia Institute.
But new neighbourhood income data released by the Australian Bureau Of Statistics shows that floods and droughts have pushed average incomes in some areas backwards, and a squeeze on household budgets continues to lead to poorer health outcomes in the bush.
CEO of the Rural Australia Institute, Jack Archer, said he had been “a bit worried that the American disease was going to come to Australia”.
“That would mean growing income inequality, particularly geographically – wages in the bush stagnating while inner city, metropolitan wages were growing much stronger,” he said.
“But this data doesn’t show that at all.”
Bush keeps pace with city
The data shows regional areas have outpaced metropolitan suburbs in average income growth between 2010-11 and 2014-15 – 17 per cent compared to 15 per cent over the period.
A large disparity in average income between rural and metropolitan areas remains however – $65,000 compared to $54,000.
CEO of the Rural Health Alliance, David Butt, said lower incomes in rural areas combined with high living expenses meant there was less discretionary income for Australians living outside cities.
“Housing can be cheaper but your food is more expensive, your petrol costs are higher,” he said.
“You then look at your discretionary costs – how do you pay for private health insurance?”
He said as regional household budgets are squeezed, preventive treatment and medicines are often the first things sacrificed, which leads to higher rates of chronic disease, forced travel for specialist medical assistance and an impaired earning capacity.
“The rural sector drives a lot of Australia’s productivity, but you’ve got poorer health outcomes and people don’t participate in work as much.”
Over the data period, only six regions with at least 1000 income earners recorded a decline in median income.
Two of those – Yarriambiack and Buloke – are in the wheatbelt of north-west Victoria, around the towns of Warracknabeal and Charlton.
Mallee MP Andrew Broad said the early 2010s coincided with a “a bit of a hard road” which affected the region’s mostly agriculture-focused commercial sector.
“We’ve had a tough run, and there’s not a lot of businesses that aren’t seasonal-related,” he said.
He said Charlton had floods one year, there was one decent year, then two successive years the region suffered significant drought.
Across the two areas, around 300 fewer earners were recorded in 2014-15 compared to 2010-11.
Buloke Councillor Ellen White said commodity prices also tend to impact how much income the areas received.
“Last year in Buloke we had a pretty good year yield-wise, but nobody made as much money as you would think because the commodity prices weren’t as good as the year before,” she said.
She also speculated that the decline in median income may be related to newer residents who had been attracted to the area for its low-cost housing. This trend, she said, posed problems given a scarcity of services in the area and the requirement for skilled labour within local farming industry.
“Because of where we are, we require specialised workers with experience with machine operation and so on, but a lot of those people wouldn’t be qualified for the jobs,” Cr White said.
Not out of the woods
Mr Archer said it’s important that the benefits of a successful economy are shared between different people and different places.
“One of the problems in the way America has been growing is that the economy overall is doing quite well, but those benefits are really being concentrated in upper income areas in different parts of the country,” he said.
“That’s what creates a lot of division, a lot of frustration, people feel like they don’t have access to the opportunity others have got and their future’s looking bleak.”
The rise of anti-establishment politicians such as Donald Trump in the US has been linked to this income inequality.
According to analysis by SBS News, income growth in wealthier areas in the east of Sydney and the inner east of Melbourne has outpaced growth in other areas.
Mr Archer cautioned that it may not be for a number of years until Australia can be confident its economy has avoided the American example.
“Is the mining slowdown still to be reflected in incomes? Is it the next period of results, will that story really start to come out?,” he said.
“Or is there something else going on, and the impacts of those changes are being felt as much in cities as they are in other places?”