The Carbon tax and its implications on distribution of income and wealth

In a unique economy such as Australias commodities based economy, the high income earners tend to be quite rich and the low income earners are quite poor would be a logical conclusion? And therefore there should be a large gap in the distribution of income and wealth? If the truth were the opposite, would it be so hard to believe it? This conclusion did not come from looking at the Bureau of Statistics survey of the distribution of wealth but from Richard Finlay's decomposition of the wealth figures included in HILDA - the survey of household, income and labour dynamics in Australia. However this is also due to having sustainable economic growth, which allows for fewer aspects in the economy to drain the revenue from the government. In Australia, including most economies, the distribution of income is tend to be unequal, this is due to how there are different kind of jobs and the income that they receive, social welfare payments, progressive income tax system and regressive taxation that affect how much income an individual receives and hence create a huge gap between low-income earners and high income earners. And the distribution of wealth in the economy is more unequal due to how the government has been focusing more on the equal distribution of income rather that the equal distribution of wealth. The Bureau of Statistic figures for 2009-10, the wealthiest 20 per cent of households had 40 per cent of all the income, but 62 per cent of all the wealth. By contrast, the worst-off households had 7 per cent of the income, but just 1 per cent of the wealth. The main policy that the government has used to create a more equal distribution of wealth is through compulsory superannuation, which is an amount of money that is payed by ones employer and cannot be accessed till they retire and was formally introduced in 1992 and originally set at 3% of an employees income, however it was 1 July 2002, the minimum contribution was changed to 9% of an employee's ordinary time earnings . This means while the person is working, they will receive interest on the fund and hence when they retire they will have access to a source of wealth. This is shown how a higher proportion of people aged 25 to 54 years had superannuation coverage (87%) than people aged 55 to 64 years (75%) or people aged 65 and over (29%). The policies used to create a more equal distribution of income varies between the progressive tax system and social welfare payments and helps low income families to have a better quality of life through having better assess to good and services. In 200910, households received, on average, $91 more in total government benefits (social assistance benefits in cash and social transfers in kind) than they paid in taxes, giving an average final income of $1,704 per week compared to average private income of $1,613 per week

(Table 3). Strong economic growth can also assist in creating a more equal distribution of income and wealth as it creates more revenue for the to use.

The current trend for economic growth in the Australian economy is that the economy has expanded in a slow pace over 2012, however growth was slower in the second half of the year (shown in the diagram). Mining investment is still strong despite growth slowing down in the economy, however mining investments expected to peak at 9% of GDP later in 2013. However as this expected decline occurs in the economy, it is crucial that other sectors in the economy is set up to compensate for this decline. This switch in the drivers in growth in the Australian economy creates new business opportunities, and therefore drives structural change and helps sustain growth in the long term as well as the short term. This is due to how it creates more demand for jobs in areas that are different to the industries that are going well but will soon go into a downturn and hence help growth as it creates demand for labour.

The impact of globalisation on economic growth in Australia has been enormous as it has assisted Australia into having more growth and technology available then it would the globalisation did not occur.