AUSTRALIANS still get "a fair go", with income inequality falling sharply this century, according to the organisation that represents 30 of the world's richest countries.
Parents' incomes and education had little bearing on the success of their children, making Australia one of the most socially mobile countries in the world, the Organisation for Economic Co-operation and Development found.
The narrowed gap between Australia's rich and poor went against a trend of greater inequality in more than three-quarters of OECD countries during the past 20 years, with the gap widening most dramatically in Canada, Germany, Norway and the US.
While the Australian Government did not spend as much as most OECD governments on cash benefits for families and disadvantaged people, it targeted such benefits more tightly on low-income households than any other country in the OECD.
"Only Belgium, Denmark and Sweden do more to support low-income households through the tax-transfer system," the OECD said in a report called Growing Unequal.
But the efficient welfare state seemingly overlooked older Australians, with poverty among those older than 65 worsening during the past decade to 2005, compared to other developed countries. About half of Australian singles over 65 were living in poverty, the third highest in the OECD.
Child poverty rose in countries such as New Zealand, Germany and Canada.