Income gap roars back in post pandemic recovery

Yet with the fresh Productivity Commission analysis failing to cover the fallout of the inflation surge and subsequent interest rate hikes, the national advisory body says it is too early to say if the pandemic left Australia a more or less equal nation than before.

The deep dive into economic inequality dynamics since 2019 captured the already well-document influence of extra government support during lockdowns.

While many lost their jobs, the Jobseeker top-up and Jobkeeper payments improved the disposable incomes of lower-income households more than their middle and higher-income counterparts.

Once vaccines were rolled out and the recovery got underway, there was a flurry of economic activity and strong demand for workers.

Both middle and lower-income workers benefited from the latter, with the number of long-term unemployed sitting almost 40 per cent lower than pre-pandemic levels, as of February this year.

Yet it was high-income households that benefited "significantly" from the economic boost from the pandemic recovery as financial markets improved and consumers spent their savings built up during lockdowns, feeding into higher profits.

Business incomes have likely taken a hit, though, from the latest round of interest rate hikes, cost-of-living pressures and subdued consumer confidence, the commission wrote in its report.

The early days of the pandemic also drove an improvement in wealth equality, the commission said.

That was in part because the real estate boom during the pandemic was concentrated in the regions as working from home allowed people to leave the cities.

In Australia, superannuation and the family home are the top stores of personal wealth.

Commissioner Catherine de Fontenay said the bump in income supports also helped lower-income Australians save or pay down debt.

"This all had the effect of reducing wealth inequality," she said.

Australian Associated Press