Address to OECD Forum: Tackling inequality – drivers and consequences of growing inequalities

*** Check Against Delivery ***

Thank you Professor Freeman for your presentation.

The gathering here at the OECD over the next two days presents a significant opportunity to discuss important social policy issues we are all facing.

This is a diverse room, but we share many things in common.

The past few years have been tumultuous times for the global community.

The global economic crisis presented one of the greatest challenges to economic growth for several generations.

And far too many citizens of our nations experienced first hand the direct link between economic growth and social prosperity.

In the downturn many of our most vulnerable were hit hardest by the consequences of economic contraction, weakening labour markets and unemployment.

The challenge during the crisis was to act swiftly to cushion these impacts.

The challenge for the recovery is to ensure that the upturn lifts with it those who experience disadvantage. To share the benefits of growth, and especially the benefits of participation in work.

These issues are front and centre of the Australian Government’s mind as we prepare our nation’s Budget due for release next week.

Australia weathered the financial crisis without going into recession thanks to fiscal stimulus and the underlying strength of the Australian economy.

Despite our resilience, challenges continue to confront us.

And despite our relative prosperity, too many Australians continue to be excluded from the benefits of our country’s wealth.

Australia continues to focus on the complex issues of inequality and disadvantage.

A great strength of Australian society is our social safety net – a strong minimum wage, comprehensive income support, and one of the most highly targeted pension systems in the OECD.

We have one of the most redistributive social welfare systems in the world.

Net benefits to the poorest 20 per cent of our population are among the highest in the OECD.

The targeted, means-tested, flat-rate design of the Australian social security system is a crucial element in alleviating poverty and ensuring sustainability for future generations.

But, while our social policy structures ensure that most Australians live well, there are some groups who experience greater levels of disadvantage including multiple, and intergenerational, disadvantage.

These include jobless families, people experiencing homelessness, people with disability and Indigenous Australians.

And many of these are concentrated in specific locations where multiple disadvantages compound.

They present substantial barriers to employment and community participation, and lead to dysfunctional families and communities.

We know that disadvantage in one area can lead to disadvantage in others and can often be based on multiple, complex and interconnected barriers to participation.

These cycles of disadvantage are not always easily broken by our existing service systems.

To address them requires targeted, intensive solutions, to ensure that fewer people experience this burden and do not pass it on to our children.

So that children don’t grow up in households where no parent has worked.

Australia has the fourth highest proportion of children under the age of 15 living in jobless families in the OECD.

Impacts of childhood socio-economic disadvantage, abuse and/or neglect reverberate later in life.

Children who experience these forms of disadvantage are more likely to experience poor mental health, low educational attainment and unemployment in adulthood.

A number of locations around Australia have high unemployment rates, a high proportion of the population on income support, poor educational attainment and industries in decline.

Many are missing out.

There are many places in our suburbs and towns where unemployment is in double digits, and significant numbers of the working age population are on income support payments

Education and health are crucial to breaking the cycle of disadvantage and enabling people to get work and participate in the economy.

Our government also views welfare reform as another key driver of breaking the cycle of disadvantage and dysfunction. And I will say more about our government’s efforts in this area over the course of the next two days.

It is a challenge shared with many developed countries, including many of you here.

We are all seeking ways to support people in need while encouraging them to take their place, socially and economically, in their communities.

We need to consider whatever options are going to most help get people on their feet.

Simple, and isolated, approaches do not work.

This is why we need multi-faceted approaches to assist people engage productively with their communities and the workforce.

The Australian Government is tackling these complex areas. But like the issues they are seeking to address, the solutions are not simple.

And these are issues that do not just face Australia alone. I am sure many other nations face similar challenges.

I believe this is should be emerging area of policy focus for us all, and for organisations like the OECD.

To better understand why we have such concentrations of extreme disadvantage; how that can lead to family dysfunction; how that dysfunction creates further barriers to participation; and what action we should take to address it.

Australia believes a fair social system contributes to economic growth.

Equally, we believe our fellow Australians should share in economic growth.

This is the driver behind our reform agenda.

Ensuring every Australian has the opportunity to work is important for securing Australia’s long term prosperity.

Moving beyond crisis management and creating long term preventative solutions.

Our Government is seeking to foster a new culture of work and opportunity in families and communities who have been denied this too long.

To achieve our earning and learning goals, the Government has taken policy steps to assist the lives of vulnerable Australians, to ensure that Australian families and children are adequately supported to achieve their full potential.

So they can enjoy economic independence, and a sense of dignity.

Australia will always provide a safety net for those in need but we want all our fellow Australians to have the opportunity to share in our nation’s prosperity.