This paper examined the key determinants of Australia’s income inequality. Surprisingly, particularly given the increases in Australian income inequality over the last quarter-century, little research has been done for Australia. The present paper can therefore be viewed as a preliminary exploration. The findings are intriguing and will hopefully encourage other researchers to further explore the issue. Among the findings is that more trade and improved terms of trade are equity-enhancing. Institutionally, de-unionisation of the labour force is having the anticipated adverse effect on income inequality. On the other hand, the welfare state has responded; rising minimum wages — the anchor upon which low-skilled and semi-skilled workers have their own incomes determined — have reduced income inequality. In addition, the progressivity of the income tax system has served to lessen the impact on low-income workers. The main finding is that globalisation — broadly-defined — has increased income inequality. Notably, the result is not attributable to increased trade openness and falling trade barriers. In fact, quite the opposite is the case. The global environment, and Australia’s role in that environment, is a starkly different and possibly more uncertain one than Australians found ourselves in a quarter-century ago.