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   11   Income inequality

Mr Giles, pursuant to notice, moved—That this House:

(1)        notes with deep concern that:

(a)        income inequality in Australia is growing such that currently the top 20 per cent of households receive half of Australia’s income while the bottom 20 per cent receive just four per cent; and

(b)        in 2013 the top 1 per cent of Australian earners received 9 per cent of Australia’s income, and the top 0.1 per cent received 2.5 per cent, in both cases representing the highest proportion since the 1950s, and a proportion which continues to increase;

(2)        notes rapidly increasing executive and, in particular, Chief Executive Officer (CEO) remuneration, for example between 1971 and 2008, real CEO pay grew by nearly five times, while the real average weekly earnings grew just over one and a half times despite:

(a)        research showing that executive pay increases are not closely related to company performance;

(b)        the belief that large disparities between executive pay and average earnings might actually demotivate a company’s employees and adversely affect priorities, as reported in the 2009 Productivity Commission inquiry into executive remuneration in Australia; and

(c)        the belief that poor remuneration arrangements can promote inappropriate, risky short term decision making, carrying wider economic ramifications including a negative impact on productivity growth;

(3)        notes the positive effect of past legislative efforts on ensuring corporate executive remuneration is transparent, particularly the ‘two strikes’ legislation which came into effect in 2011, acknowledging that mandatory disclosure of CEO pay ratios, as required in the United Kingdom and more recently in the United States, would:

(a)        provide:

                                                   (i)       important information to shareholders voting on executive remuneration; and

                                                 (ii)       a more accurate measure of an important aspect of income inequality in Australia; and

(b)        improve the health of our democracy by making important information more accessible to the public; and

(4)        calls on the Government to consider following the lead of the United States in its Dodd-Frank Wall Street Reform and Consumer Protection Act in mandating that public companies disclose the ratio of a CEO’s annual total remuneration to the average annual total of all company employees.

Debate ensued.

Debate adjourned, and the resumption of the debate made an order of the day for the next sitting.