The year is 1834. Scotsman Campbell Drummond Riddell, treasurer of the new colony "Australia", begins construction of Lindesay House, the first major home built on the Darling Point peninsula in Sydney.

Together with his wife, Caroline, they enjoy commanding views of the glittering harbour from 17 acres of gardens, which sweep down to the shore. Four years later, they quietly celebrate the birth of their second son.

Six hundred kilometres north, a tragedy unfolds.

In 1838, Myall Creek station becomes the site of one of the most infamous massacres of Aboriginal people in Australian history.

Eleven stockmen will be hanged for their heinous crime: the beheading and death by sword of at least 28 indigenous men, women and children.

Two stories illustrating the privilege and poverty of Australia's colonial days.

Fast-forward nearly 200 years and again these two postcodes tell the story of a divided nation.

Australians like to tell a story of ourselves as a homogenous, happy-go-lucky nation of equals.

But we confess a different story to the Tax Office.

According to Tax Office statistics, the postcode of 2027, which encompasses the suburbs of Darling Point, Edgecliff, Point Piper and HMAS Rushcutters, is home to the highest incomes in the nation.

Nearly 6000 individuals reported an average taxable income of $177,514 for the 2012-13 financial year.

Bankers, lawyers and doctors who dominate the high-income earning professions also dominate the inner eastern suburbs.

Life is more peaceful these days at Myall Creek and the neighbouring townships of Delungra and Gragin that make up postcode 2403.

Wheat silos dominate the prime grazing landscape, with nearly half of workers employed in the sheep, beef and grain farming industries.

But workers here labour in the poorest postcode in the nation, with 350 individuals reporting an average taxable income of $21,691.

It will take residents of Delungra eight years to earn the same income Darling Point residents earn in one.

NSW is nothing if not a study in contrasts, home to six of the top 10 richest postcodes in Australia, but also seven of the poorest.

Victoria dominates the remaining rich list, nabbing three of the top 10 richest postcodes, at Toorak, Portsea and St Andrews.

And these statistics tell only part of the story: income. Wealth is another story. High-income earners in Darling Point are also more likely than the denizens of Delungra to own expensive property and other assets.

No doubt, some of these wealthy Australians have worked darned hard to secure their wealth. The postcode of 2027 no doubt harbours many a determined immigrant and workaholic professional.

But how many? What is it that buys you an entry to Australia's richest postcode? Hard work, or unfair privilege?

A country can be judged by those who rise to the top, according to economists Paul Fritjers and Gigi Foster.

In a recent paper, "Rising Inequality: A Benign Outgrowth of Markets or a Symptom of Cancerous Political Favours?" published in The Australian Economic Review, the economists analyse the top 200 richest Australians according to BRW rich list.

Their conclusion? "Almost all the 200 richest Australians look like the beneficiaries of political favours rather than innovators or superstars."

Of the 200 richest Australians, 61 derived their wealth from property, 23 from command of natural resources and 19 from organising investments. Property moguls, mining magnates and bankers who make a living by gaming government rules and regulations.

"About half of our super-rich spend their efforts on activities where local political decisions determine the winners: decisions about who gets to build which property where, who gets access to favourable mining concessions, and so on," the economists say.

Standard economic theory says that, in most cases, wages reflect the relative marginal productivity of workers. The story goes that technological advantages have increased the value of certain skills, particularly of the tertiary educated. Low-income earners get replaced by machines, but highly-educated workers know how to operate them.

On this theory, rising income inequality is the result of natural market forces and no concern for economists.

The alternative theory, is that income is the results of rent-seeking, whereby the rich get rich by seeking special favours through the political system.

According to Fritjers and Foster, only five of the richest Australians could be identified as true innovators, by inventing new machines like solar panels.

People get rich in Australia largely by manipulating the system rather than true innovation.

"The possibility that increased inequality has been driven by changes in the allocation of political favours lends strength to the argument that economists should seriously examine political power and group behaviour."

Something is rotten in Australia's supposed egalitarian state.

Two important questions arise for policy makers.

First, does Australia's tax and transfer system allow wealthy families to bestow unfair riches to the next generation?

Undoubtedly it does, thanks to capital gains holidays on the family home, the absence of death duties and the use of complex family trusts.

The goal is not to destroy the wealth accumulated in Australia's prosperous postcodes, but to ensure it is not hidden from the tax net that helps to underpin a more equal society.

The second crucial question for policy makers to consider is this: can a boy from Delungra find a home in Darling Point?

Have we invested enough in a top-class education system to equip a child from the poorest postcode with the skills to earn the income to afford to live in the richest postcode? Soaring property prices in privileged areas and Australia's lagging education results suggest the answer is, sadly, no.

Something is rotten in Australia's supposed egalitarian state