Friday, July 8, 2011


IQ2 Debate Sydney City Recital Hall
Tuesday, July 8, 2008

Some of you who read my column may be wondering what on earth I’m doing on the side opposing this motion that, by 2020, only the rich will be at home in Australia. Don’t I care about inequality? Well, yes I do. Do I believe everything in the garden is rosy? No I don’t. I do believe the gap between high and low incomes is too wide and I’d be happy to see governments do more to redistribute income from high income-earners like me to lower income-earners like you. (No, I suspect few of you are low income-earners.)

So why am I opposing this motion? Because it’s too extreme; it’s way too pessimistic and it goes over the top. Think about it: by 2020, only the rich will be at home in Australia. Let me ask you: do you feel at home in Australia right now, or do you feel like an outcast? Are you rich? No, you’re not. But what this motion asserts is that, within just 12 years or less, you’ll be dispossessed. If you own your home now, within 12 years you’ll have lost it. If you’ve got any superannuation, it won’t have grown in the next 12 years, it will have disappeared. If you’re middle-class, educated and reasonably comfortable now, within 12 years you’ll have lost it all. You’ll by like a new migrant who isn’t sure he jumped the right way; who doesn’t feel at home in Australia.

Another question: what proportion of the population would you consider to be rich? The top 50 per cent? 20 per cent? 10 per cent? What about the top 2 per cent? To be in the top 2 per cent of taxpayers you have to be earning more than $180,000 a year. So let’s say the top 2 per cent. This motion is saying that, within 12 years, the remaining 98 per cent will be stuffed. Now, I don’t pretend to know what will happen in the next 12 years, but the other side is certain they know: you are going to be completely buggered.

I don’t believe that for a minute, and that’s why I’m opposing this motion. It takes a sensible argument - the gap between rich and poor is too wide - and goes way over the top, predicting death and destruction for everyone in the middle.

Let me make three points. First, don’t believe everything you read in the paper. (Except the Herald, of course.) By their intense focus on the amazing salaries of a relative handful of chief executives and rich businessmen they’ve left us with a quite exaggerated impression of how well everybody earning more than we are is doing. What happens to the incomes of about 2000 men (and the odd woman) may be big news, but it tells us little about what’s happening to the remaining 21 million of us.

Second, it’s naïve to assume, as our opponents do, that things just keep moving in the same direction forever. If they’ve been getting worse, they can only keep getting worse. History shows that’s not true. The economy moves in cycles - house prices move in cycles, home loan affordability moves in cycles, interest rate go up and then come down. I believe in the pendulum theory of history, under which things keep moving in one direction until there’s a reaction, and they start swinging back in the opposite direction, only eventually to go too far in that direction. The proposition that gap between rich and poor can only widen in the next 12 years reveals an ignorance of the way the world works.

Third, what will all the low and middle-income voters be doing while they’re being dispossessed by the top 2 per cent? Democracy protects us from such extremes because the rich will never have more votes than the bottom and the middle, and governments that want to stay in power must attract the votes of the non-rich. The notion that elected governments do nothing but pander to the rich and powerful is defies common sense.