In a capitalist economy such as ours, the rich have loads of money, the poor have next to none and the government does little about it.
Is that what you suspect? It's a long way from the truth. While some (including me) may argue they could be doing more, between them our governments - federal and state - are doing a lot more to redistribute income from the rich to the poor than many people imagine.
The reason so few people realise this is the system that brings it about is very complex. To see what's going on requires a special study - which is just what the Bureau of Statistics does every six years.
In its publication, Government Benefits, Taxes and Household Income, the bureau uses several of its surveys to take all the taxation we pay - federal and state - and attempt to attribute it to households of differing incomes. It does the same for all federal and state government spending.
But not all the taxes we pay can be attributed to households - company tax, for instance. Similarly, not all government spending can be attributed - spending on defence or roads, for instance.
In the latest study, for 2009-10, it managed to attribute $194 billion, or 62 per cent, of total government revenue and $234 billion, or 51 per cent, of total government spending.
It ranks households lowest to highest according to their income, dividing them into five "quintiles" (groups of 20 per cent). This is handy because, if income was equally distributed, each quintile would have a 20 per cent share of total income. So you can judge how unequally income is distributed by comparing each quintile's actual share with that 20 per cent benchmark.
Households start out with "private income" - income they've earned themselves from wages, investments or any unincorporated business they may own. Then the government gives them cash benefits (such as the pension, the family tax benefit or the dole) and benefits in kind (such as free or subsidised education, healthcare, subsidised childcare and public housing).
But governments also take money away from households in the form of income tax and indirect taxes (such as the goods and services tax, several sin taxes and various state taxes).
Allow for all these things and you end up with households' "final income". So how much does all the governments' taxing on the one hand and spending on the other end up changing people's incomes?
Quite a bit. The poorest quintile is composed mainly of pensioners and people on the dole. Its share of total private income is less than 5 per cent, whereas its share of total final income is more than 7 per cent.
The second poorest quintile (composed mainly of self-funded retirees and the working poor) has its share of total income increased from 9 per cent to 13 per cent.
The middle quintile (composed mainly of working families) has its share raised from 15 per cent to 17 per cent.
The second-highest quintile's share is virtually unchanged at 23 per cent. But get this: the highest quintile (mainly two-income couples without dependants) has its 48 per cent share of private income reduced to 40 per cent of final income.
So the system of taxes and benefits takes 8 percentage points of total income from the top 20 per cent of households and redistributes it to the bottom 60 per cent.
But how exactly does it bring this about? For a start, income tax is "progressive" - it takes a progressively higher proportion of tax as income rises.
The bureau's figures show income tax takes about 8 per cent of the private income of households in the lowest quintile but the proportion steadily increases until you get the highest quintile, which loses more than 19 per cent.
(If that last proportion seems low, remember income tax is levied on the incomes of individuals, not households. Most top households would have two income-earning individuals, probably with one partner earning a lot more than the other, thereby lowering their average tax rate.)
Of course, you'd expect the progressive effect of income tax to be offset by the "regressive" effect of indirect taxes. A regressive tax takes a higher proportion of low incomes than high incomes.
And that's just what the bureau's figures show. On average, households in the lowest quintile lose 19 per cent of their "gross income" (private income plus cash benefits) in indirect taxes. That proportion falls steadily until you get to the highest quintile, which loses less than 8 per cent.
So what's the story when you put the two types of tax together to examine the effect of the total tax system? You find the tax burden as a proportion of gross income is very roughly U-shaped. The lowest quintile loses 24 per cent, but then the proportion drops to 22 per cent before slowly rising to reach 27 per cent for the highest quintile.
Clearly, the total tax system does surprisingly little to redistribute income from the top to the bottom.
See what that means? Though few people realise it, most of the redistribution done by the budget comes not from its tax side but from its spending side.
That's particularly the case with cash benefits which, after all, are tightly means-tested. The cash benefits received by households in the lowest quintile are equivalent to 47 per cent of their private income.
But that proportion falls sharply until you get to the highest quintile, whose cash benefits add just 2 per cent to their private income. Mental note for all lefties: means-testing makes the cash benefits system highly progressive.
By contrast, most benefits in kind are provided on a universal basis - that is, without means-testing. That's true of healthcare and education spending. So you wouldn't expect their distribution to be particularly progressive.
You wouldn't expect it, but for some reason it is. The in-kind benefits received by the lowest quintile are equivalent to 53 per cent of private income. But that proportion falls sharply to reach just 12 per cent of the highest quintile's private income.
All told, the whole tax and benefits system adds an average of $241 a week to the incomes of the bottom 20 per cent of households but subtracts an average of $484 a week from the incomes of the top 20 per cent. That's quite a redistribution.
