The Treasurer has dismissed criticism of his budget as "class warfare", but he was the one who pitted an upper class of the rich and powerful against the victims of rising inequality, writes Mungo MacCallum.

Our increasingly irascible Treasurer, Joe Hockey, has raised an old Liberal Party demon in his latest efforts to persuade the voters to control their nausea over his budget offering.

His critics, he told a gathering of the elite at the conservative Sydney Institute, were indulging in class warfare, and that was obviously a bad thing. Why, it was the rhetoric of the 70s. Obviously it was simply unAustralian to even suggest that there were classes in our wide brown land, let alone that they could have their differences.

This is not a new theme: indeed, it was the mantra of his party's founder, Robert Menzies, in his landmark manifesto of 1942. "In a country like Australia," proclaimed the great man, "the class war must always be a false war." He did not deny the existence of class altogether - far from it. Certainly there were the rich and powerful, who could look after their own interests. And then there were the mass of unskilled people - government did have role in providing them with security and improving their conditions, although this was more the job of their own trades unions.

And most importantly, there were the forgotten people - the middle class, a group of which he went on to claim both membership and ownership - he appeared to believe he had personally discovered it, if not actually fathered it. But we did not have classes here as in England.

Well, no; there is no established aristocracy. Tony Abbott is yet to make his knights and dames hereditary titles. But there are certainly individuals and even families referred to, not in total irony, as Australian aristocrats - think the Macarthur-Onslows or the Baillieu-Myers. Such families inhabit the same exclusive suburbs and estates, belong to the same clubs, go to the same parties, and frequently intermarry and interbreed. Then they send their offspring to the same schools so they can be part of the same networks when it is time to move on, frequently into the family business - until recently the great newspaper families of Syme, Fairfax and Packer were known as dynasties.

This was the old Australian establishment, alive and kicking in the 70s and still not entirely defunct. But as numerous authors, notably Craig McGregor, have pointed out, there is still class in Australia - not as sharply defined and certainly more mobile than it used to be, but class nonetheless. The upper class was, and is, identified by Menzies simply as the rich and powerful: a good pedigree is still no handicap, but wealth is the keystone. In neo-Marxist terms, these are the capitalists, the ruling class.

And at the bottom are the underclass: the increasing numbers living on or below what is accepted as the poverty line. These days they are seldom starving (although many are hungry), but they are, unmistakeably, the downtrodden. And the present government apparently believes that it is entirely their own fault, and that they are not even entitled to expect the trade unions invoked by Menzies to help them out of it.

Not only that, the inequality gap is widening, and widening fast. It is perfectly true, as Hockey avers, that while the rich have got richer, so have the poor - what used to be called the trickle-down effect. But the figures that worry the sociologists who compiled the "Advance Australia Fair?" report released last week show that the rich are breaking well clear of the pack in terms of both.

At the end of the 1970s - ironically the time of Hockey's class warfare rhetoric - Australia was one of the most egalitarian countries in the world; for almost all the previous 50 years incomes at the bottom of the scale had risen faster than those at the top. This was what Australians meant when they boasted of the land of the fair go.

But things have changed. The richest fifth of Australian households now account for 61 percent of net household worth, while the poorest fifth hold just 1 per cent. And the income share of the top 1 per cent has doubled, while the income share of the top 0.001 per cent - just 230 of the super-rich - has more than trebled. This is a shift not just in the distribution of money, but also of power: the ability of well-organised wealth to influence government policy has become more blatant in recent times - the mining industry being the most obvious case study, but there have been others and there will be more.

To draw attention to the problems, as those unhappy with the Abbott-Hockey approach have done, is hardly class warfare. And in any case, it is not the critics who started the fight but Hockey himself. Not content with producing a budget which has done about as much to promote national harmony as the Cronulla race riots, the man John Howard once described as his "big bear" of a man has gone out of his way to spruik in the most inflammatory terms possible.

It was Hockey who divided us into lifters and leaners; Hockey who claimed (absurdly) that every wage earner was labouring for more than a month each year to buy welfare for someone else; Hockey who assured us that only 45 percent of us paid tax to cover more than $6,000 worth of entitlements for every man woman and child in the country: us against them, not the haves versus the have-nots, but the workers versus the bludgers.

This is pure Tea Party: if you're poor, you're guilty. So get off your arse (or out of your wheelchair) and do a bit of heavy lifting. Class warfare indeed. Hockey reckons it's all a misconception driven by envy, but consider: is there a single supporter of the budget on an income of less than about $150,000 a year? Just one? And it must be said that the critics are rather more diverse. Sure, the victims are the noisiest, but they have been joined by a number of very well paid commentators, and such former Liberal luminaries as John Hewson.

And I suspect, that from his grave, Sir Robert Menzies is giving them the thumbs up. Not much class warfare there.

Mungo Wentworth MacCallum is a political journalist and commentator. View his full profile here.