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What is your one big idea?

Discussions about productivity cannot be separated from discussions about the kind of society we want to live in and whose living standards we are trying to lift. We must address Australia’s growing inequality which is one of the major causes of weak productivity and declining living standards in Australia.

We are now the second-wealthiest country in the world yet one in eight of us still lives in poverty, including one in six children. Meanwhile, wealth inequality continues to grow. Shares and investment property in Australia are very unequally distributed - the top 10% hold around 80% of those assets by value. And while those in the top 10% hold nearly $5m each in wealth, more than 600,000 people have been living on $395 per week for more than a year, with the unemployment payment now just 43% of the minimum wage. Many among this group are older people and people with disability.

What are the benefits?

This dramatic concentration of wealth has been driven by damaging policy decisions with major social implications which harm us all. Large concentrations of wealth undermine competition and economic dynamism, grow the political influence of vested interests and deny opportunities for people, stifling innovation.

OECD studies have found that reducing inequality increases a country’s GDP. If people have stable housing and decent incomes, we are much healthier and better able to learn and work. Poverty is one of the most expensive policy choices we continue to make. If our employment services were reformed, as well as the system to recognise overseas qualifications, we could provide the real help people need to develop the right skills and secure the jobs available now and into the future. For example, in Australia 5.5 million people are living with a disability. Truly tackling ableism, racism and ageism will help more people achieve their potential.

What are the downsides?

There is no downside to a fairer, more equal society that lifts living standards especially for those who have fallen behind.

How practical is it?

The Australian Council of Social Service has several proposals to improve productivity to create a fairer, better society that are both practical and reasonable. We believe that loopholes in our personal income tax system should be closed so that people pay their fair share of tax on investment incomes. This should include a gradual halving of the capital gains discount for individuals and trusts from 50% to 25%, reducing it 5% per year over five years.

The use of private trusts and companies to shelter income should also be addressed to broaden the income tax base and address intergenerational inequity. These tax changes would put a break on growing inequality and also encourage more productive investments.

We also have a range of proposals to improve productivity and quality in community services, lift public investment in housing for those with the least, and support households and businesses to adjust to climate change. Government needs to do more – not less – in all of these areas.

How politically risky is it?

There is far greater political risk in not acting to address inequality and raise living standards. Our polling in partnership with the University of New South Wales found 74% of people in Australia agreed that the gap between the wealthy and those living in poverty is too great and should be reduced.

If inequality continues to grow it will present an increasing threat to economic dynamism and innovation, social wellbeing and democracy. At the same time, there is growing community support for the changes we would like to see, including fixing our woefully inadequate social security system.

• Dr Cassandra Goldie AO is the chief executive of the Australian Council of Social Services