There is a substantial amount of inequality with regard to the distribution of income in Australia. Sources say it is becoming slightly worse in recent years. In 1999-00, top 20% of income recipients accounted of 48.5%. They had average weekly income over 12 times higher than the average income of the bottom 20%. The bottom 60% of income recipients receive less than 30% of total income.

There are economic and social advantages and disadvantages of inequitable distribution of income. Economic benefits occur when there is an increase in the productive capacity of resources and thus an increase in real GDP per capita.

The first benefit is that the labour force is encouraged to increase education and skill levels. Since jobs with higher qualification and skills provide higher income, the labour force will want to improve their education and skill levels in order to receive a higher income. Thus there is an increase in the...