Aussies’ prosperity potential trumps American dream

Aussies are far more likely to lift themselves out of a lower socio-economic standing than their US counterparts. (Source: Getty)

Aussies who come from a poor socio-economic background are far more likely to be able to pull themselves out of it than their US counterparts, according to a new Treasury report.

The Treasury analysis on economic mobility revealed Australia was on par with Sweden and streaks ahead of the US when it came to income mobility.

Australia remains a highly mobile country compared to the US, in terms of incomes, with a child born in the bottom 20 per cent in Australia more than 60 per cent more likely to reach the top 20 per cent than if born in the US.

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Plus, the link between a person's income and their parent’s income is less pronounced in Australia than in the US.

However, the analysis - which drew on Australian income data from adults born between 1978 and 1982, to see how that generation's earnings compared to their parents - also foreshadowed a slowdown in income mobility between generations.

The proportion of young people earning higher incomes than their parents remains high but is starting to slip, with slowing productivity in developed nations contributing to dampening mobility between generations.

Treasurer Jim Chalmers said Aussies should look to the mining boom to ensure future generations didn’t struggle with income inequality.

"Mobility is all about how easy or hard it is for a kid from a disadvantaged background to become more prosperous themselves as an adult," Chalmers said.

The Treasurer said the analysis revealed a strong upwards mobility in Western Australia and Queensland early in the last decade, which was partly driven by the mining sector creating good local jobs.

Chalmers said mining for minerals such as bauxite, copper and nickel to supply clean-energy technologies would fuel another round of well-paid jobs.

"And through all of that, there are huge opportunities to create new, high-skill jobs up and along the value chain - through processing, refining and manufacturing," he said.

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