The question of inequality has permeated recent public debate in Australia. From stagnating wages to CEO salaries, from retiring boomers to renting millennials, the widening gaps in our society have come under intense scrutiny. A less scrutinised gap is widening in our education system.

This issues paper sheds light on this educational inequality and its cost to Australia. It analyses the costs of students at the bottom falling further below those at the top and estimates that over the six years from 2009-15 alone, this growing inequality has cost Australia around $20.3 billion, equivalent to 1.2% of GDP. The longer-term cost to Australia is even bigger, because the gap was widening well prior to 2009.