By Ann Harding, Quoc Ngu Vu and Alicia Payne, NATSEM

Available evidence suggests that the past decade has generally been one of rising earnings and prosperity for the majority of Australians. Broadly speaking, wage earners in both richer and poorer suburbs appear to have shared in the rising tide of prosperity. Although they did increase in real terms, incomes at the bottom of the income spectrum rose somewhat more slowly than for the middle between the mid 1990s and 2002-03, resulting in higher poverty rates and rising income inequality.

Both of these trends were apparently dramatically reversed between 2002-03 and 2003-04, although there are questions about the extent to which these apparent changes are due to methodological changes by the ABS. Most of the available evidence about income inequality in Australia, however, is a few years out of date and it is not yet clear what the impact of the two major policy packages introduced in 2006, Welfare to Work and WorkChoices, will be.

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