Dr Peter Davidson, Principal Advisor, ACOSS
Is rising inequality just the cost of a modern economy—or can we do something about it? In the latest paper from the Investment and Inclusion series, Peter Davidson argues powerfully that the growing gap between minimum incomes and average wages is not inevitable. With bold and practical reforms, we can reverse this trend.
Drawing on lessons from the COVID-19 pandemic—when poverty fell, people were housed, and minimum wages kept pace with inflation—this paper sets out a clear and achievable plan to reduce income inequality. At its heart are four interlinked pillars that support minimum incomes in Australia:
- Income Support
- Minimum Wages
- Full Employment
- Employment Services
When these pillars are strong, people are not forced into poverty while seeking work. They are supported to thrive. But today, each of these supports is under strain.
Dr Davidson calls for:
- Lifting income support payments to at least the pension level and indexing them to wages
- Restoring the minimum wage to 60% of the median full-time wage
- Rebalancing economic policy to prioritise full employment, not just inflation control
- Transforming our broken employment services system to one that’s fair, effective, and person-centred
This is not just about economics—it’s about justice. A decent life shouldn’t be reserved for those in secure, high-income jobs. Everyone should be able to afford the basics and live with dignity. This paper shows that by strengthening the policy foundations of minimum incomes, we can significantly narrow the gap between those with the least and mainstream Australia.