The Rich Get Richer, And The Rest Of Us Are Left Behind: Australia’s Wealth Inequality Problem
Added: (Sat Jan 07 2023)
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This is according to many media outlets last week after investment bank Credit Suisse released its most recent Global Wealth Report.
The median Australian’s wealth was approximately $408,717 in 2021, according to the study. This puts Australia at the top of the list, with Belgium, New Zealand, and Hong Kong taking the next three spots. Denmark rounds out the top five. Almost 2.2 million Australians are now millionaires—an increase of 390,000 since 2020.
It is a surprise that the 20 per cent of people with the highest incomes continue to hold such a large proportion of Australia’s wealth. Still, according to The Australian’s wealth editor James Kirby, “it’s good to know that we aren’t just a wealthy society but that those riches are not fairly distributed than nearly anywhere else”.
Although it’s tempting to get excited about headlines proclaiming Australia’s economy is thriving, not all the news is good.
Increasing the size of the pie but decreasing your share.
To begin with, Australia’s wealth isn’t as equalised as it may appear. While median wealth (which better reflects middle-class assets) captures economic equality than average wealth (which may be artificially inflated by the super-rich in highly unequal nations), neither is flawless. On inequality-focused measures, Australia falls short.
Housing affordability in Australia is a nightmare—hurting all of us.
We’re not even close to being in the top 50 on the World Bank’s Gini coefficient ranking, which measures economic stratification ( however, data availability is limited for some countries). And out of 35 nations on the OECD’s Better Life Index, we rank a measly 24th regarding social inequality.
A study conducted jointly by the University of New South Wales, and the Australian Council of Social Service’s Poverty and Inequality Partnership (PIP) found that the wealthiest 10% of Australian households have an average net worth of $6.1 million, constituting almost half the nation’s total wealth. Conversely, the lowest 60% (with an average net worth of only $376,000) hold just 17% per cent of all wealth. While these numbers aren’t terrible compared to other nations – we’re not even Russia – many countries are less concentrated.
Credit Suisse argues that while Australia has become more unequal since 2008, New Zealand has paradoxically become less unequal. What accounts for the discrepancy? It has a lot to do with how each country’s wealth is created, and it does not make either look equal.
“Australia is a big winner from globalisation, but that doesn’t mean it hasn’t come at a cost,” Kirby writes. “The benefits of our commodities boom have accrued to those who own capital, whether shares or property. The gains have been private rather than shared through higher wages.”
In other words: the rich get richer, and the rest of us are left behind.
It’s not just that the top 1% hold an increasingly large share of the pie; they keep getting richer while everyone else falls behind. The Guardian reports, “from 1980 to 2016, real incomes for the poorest 60% grew by a meagre 8%, while incomes for the top 1% grew by 61%.”
Being the “richest nation on Earth” is only competition worth competing in if said riches are genuinely beneficial and enticing to most people. “Wealth,” in the form of overpriced houses and Gina Rinehart’s super account, is not what we should aim for.
It would be much better to have enough money to live peacefully and happily, even if it means having less money overall.