Anne Urquhart (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

I present the explanatory memoranda and I move:

That this bills be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

PRODUCTIVITY COMMISSION AMENDMENT (ADDRESSING INEQUALITY) BILL 2017

Economic inequality in Australia is on the rise.

The share of national income going to the top one percent of earners is now higher than it has been at almost any time in the last seventy five years. Over the past four decades, real earnings for the top ten percent have risen nearly four times faster than they have for the bottom ten percent.

Whilst it is true that this growing inequality has come against a backdrop of rising living standards for much of the Australian community, this should not alleviate our concerns. A deeply unequal society, as exists in some other countries, would be at odds with the ethos of egalitarianism that underpins Australia's national story.

Economic inequality, whether income or wealth inequality, can ultimately manifest itself as an unacceptable inequality of outcomes and opportunities for members of the Australian community.

Economic inequality can foreclose educational opportunities to talented children from

underprivileged backgrounds, and health care options to the elderly. It can lead to social dislocation as insecurity of work or housing forces parents to move frequently, and children to bounce between schools.

Furthermore, economists have identified a connection between the inequality of a society and its intergenerational mobility, a relationship dubbed the "Gatsby Curve". The more unequal a society, the less likely children are to be able to do better than their parents.

Economic inequality is not just a social justice issue - it is also a macroeconomic issue. Research by the Organisation for Economic Co-operation and development (OECD) estimates that income inequality in the twenty years from 1985 to 2005 reduced economic growth in the OECD zone by almost five percent. Institutions including the International Monetary Fund (IMF) have found that inequality can warp patterns of demand and consumption, and can prevent talented individuals from participating to their full extent in the economy, affecting productivity and growth.

The Productivity Commission (the Commission) should play a role in addressing this.

The purpose of the Productivity Commission Amendment (Addressing Inequality) Bill 2017 is to empower the Commission to improve the quality of information and analysis available about economic inequality in Australia, and to ensure that proper consideration is given to inequality in the public debate about economic policy

It does this in two ways.

First, the Bill establishes inequality as a mandatory consideration for the Commission.

It should be noted that inequality has not been ignored by the Commission. Its reports often contain analysis on inequality, and it has produced standalone research on income distribution in Australia.

However, it is important that responding to inequality is fixed as a permanent and inescapable part of the mandate of the Commission. The Commission is more than just an advisory body. Its work helps set the national agenda, and is often relied upon as a basis for substantial policy changes. This was seen recently, for instance, with the reliance on the Commission's Report on Workplace Relations in the Fair Work Commission's 2017 decision on Penalty Rates. Consideration of inequality should be a part of its work.

A requirement to consider inequality would not be out of place in the Commission's governing legislation. Section 8 of the Productivity Commission Act 1998 as it presently stands sets out general policy guidelines for the Commission; including the considerations the Commission must have regard to in the exercise of its functions. These include a wide variety of social, environmental, and economic considerations, such as:

The Bill adds a further consideration to this list: the need to mitigate the negative effects of inequality on the Australian economy and the Australian community.

Second, the Bill establishes a framework for the Commission to regularly research and report on economic inequality in Australia.

The timeline for the Commission to produce Inequality Reports is linked to the Intergenerational Reports that are produced every five years by the Parliamentary Budget Office. This because the release of the Intergenerational Report poses an opportunity for longer term thinking by the government and other participants in policy debates. Long term thinking and policy making on social issues would be helped by an understanding of the state of inequality in Australia.

An Inequality Report would have three key roles.

An Inequality Report would assess the extent of economic inequality in Australia. The Commission would be responsible for establishing reliable and consistent measures for economic inequality. These measures should together be capable of describing the different dimensions of economic inequality, such as geography, gender, age, and other relevant dimensions. Regular and sound measurement is essential if inequality is to be addressed. Not only can governments struggle to respond effectively if the problem is not measured, but the community at large may remain unware of the extent of the problem all together.

An Inequality Report would also assess the effects of economic inequality on different aspects of Australia's society and economy. As discussed earlier, there is a connection between inequality and growth. In producing its report, the Commission would consider the extent to which economic performance has been affected by inequality. Economic inequality also presents across multiple vectors of disadvantage. In practice, economic inequality means inequality of social, educational and other outcomes and opportunities. The Commission would consider these effects of economic inequality, as well as considering how economic inequality affects intergenerational mobility.

Finally, an Inequality Report would assess the effect of existing government programs on economic inequality. Consideration and evaluation of existing policy setting is a critical part in the policy development cycle.

This Bill provides policy makers with additional tools to address inequality, and provides the public with the information to hold them to account if they do not.

I commend the Bill to the Senate.

I seek leave to continue my remarks later.

Leave granted; debate adjourned.