s In some ways Ms Dienh, the manager of Mosman Nails and Waxing in Spit Road, is a living symbol of what has happened to wealth in Sydney. A Herald analysis of Bureau of Statistics figures on wages and salaries has found the rich are getting luxuriantly super rich while the poor remain stuck on struggle street. Overall, the average wage and salary income of a Sydney worker grew 17.1 per cent to $50,136 in the five years to June 2008, according to a breakdown of annual tax returns. From the figures it is possible to derive a ''Mosman-Fairfield'' inequality index which compares average incomes in Sydney's richest and poorest areas. In 2003-04, a worker in Mosman earned 2½ times that of a worker in East Fairfield. By 2007-08 this had risen to 2.9 times.

Experts say rising housing costs are pushing low-income workers out of inner-city, harbourside areas. In eight of Sydney's 64 local areas - East Fairfield, Burwood, Strathfield, North-West Bankstown, Kogarah, South Parramatta, Inner Parramatta and South Baulkham Hills - average incomes failed to keep pace with inflation of 13.7 per cent. A senior policy officer at the Australian Council of Social Service, Peter Davidson, said the finding was consistent with other evidence of a steady rise in income inequality in Australia. ''The ABS data shows a steady rise in income inequality across the country with average incomes for the top end increasing more than the middle income … that reflects the greater share of the boom time accruing to those already on relatively high incomes. ''And the incomes of the bottom end haven't risen as strongly, despite strong jobs growth for low-skilled workers over that period,'' he said. Rising house prices were a key driver of the growing divide in Sydney.

''Only those on very high incomes can afford to live in those harbourside suburbs and indeed increasingly lower-income earners are unable to afford to live anywhere in Sydney,'' Mr Davidson said. He said the rise in inequality was not as bad as when labour markets went through massive structural change in the 1980s and 1990s. Australia now rated ''middle of the pack'' on inequality - not as bad as the US, not as good as some Scandinavian countries. He said short of another downturn, we were likely to see more of the same - a modest but steady rise in income inequality and a sharper increase in geographical income inequality because of housing affordability. An economist at Macquarie Bank, Brian Redican, said the figures reflected a period when rising interest rates had caused a two-speed economy, especially in Sydney. ''Australia as a whole was quite strong with mining and financial services, so those people working in financial services would have been doing quite well.

''The flipside of that is that interest rates were rising and that had more of an impact on NSW than other capital cities, particularly in Sydney's west.'' Higher unemployment in western Sydney and slower retail sales meant ''the lower end were actually suffering more than most and the top end in Sydney were benefiting more than most''. The bureau figures did not take into account the impact of the global financial crisis, which hit in late 2008. It undoubtedly hurt bonuses and wages growth for finance sector workers and pushed low-skilled workers to part-time work. Mr Redican predicted an improvement: ''I think you would have seen both the high-income households suffering more and the lower end suffering less … a narrowing since 2007.'' A demographer at KPMG, Bernard Salt, said rising inequality was beside the point as most Australians were better off than they were 20 years ago.

''If there is a divergence emerging it is because the super wealthy are doing so much better. I don't think it's because the battlers are going backwards. Everyone did well, it's just that the upper end did well better,'' he said. Loading The super rich would always flock to Sydney's harbour suburbs, he said. ''What this reflects is the locational preference of the well-to-do. ''I think it has been that way for 100 years. If you have money, you live in Sydney's eastern suburbs on the harbour. It's a very tightly held area. Their fortunes rise and fall but that is the common bond.''