Gap between rich and poor widens over two decades
We might be the fourth wealthiest country in the world, but the gap in household wealth between our richest and poorest has just been laid alarmingly bare.
Wealth has grown four times faster for the richest 20 per cent of Australians than the poorest 20 per cent over the last two decades, a new report finds.
The richest quintile now has average wealth of $3.24 million, 90 times the average for the lowest 20 per cent, the research shows.
Australia has the fourth highest average household wealth in the world, driven mainly by home ownership, but the wealth gap has been turbocharged by compulsory superannuation, the report by Australian Council of Social Service and UNSW finds.
And while it was reined in during the first year of Covid, when emergency government payments supported low wealth households more, that reprieve was short-lived, it says.
The report, Inequality in Australia, 2023: Overview, from the Poverty and Inequality Partnership, takes a two-decade look at income and wealth, finding a widening chasm between rich and poor.
From 2003 to 2022, the average wealth of the highest 20 per cent rose by 82 per cent and that of the highest 5 per cent rose by 86 per cent, it finds.
This was higher than the middle 20 per cent, which recorded a 61 per cent increase, and significantly higher than the lowest 20 per cent, which saw only a 20 per cent rise across the two decades.
It also concludes that housing wealth is not so much a story of “mum and dad” investors as is often portrayed, with the top 20 per cent owning 82 per cent of investment property by value and 78 per cent of all shares and financial investments.
The poorest quintile did the best in terms of income during the Covid years, growing by 5.3 per cent in 2020-21 compared to 2.4 per cent for the top 20 per cent.
But the following year saw that trend reverse to close to its pre-Covid level, the report says.
The most recent figures available from 2019-20 show the highest 20 per cent of households by income had average incomes of $4306 per week after tax, five times the income of the lowest 20 per cent.
The highest 5 per cent had eight times the income of the lowest 20 per cent. This puts Australia close to the average among developed countries.
ACOSS chief executive Cassandra Goldie said wealth inequality needed specific policy attention if governments want to create a fairer society.
“Left unchecked, growing wealth inequality threatens to exacerbate and entrench generational, spatial and social divisions in our community,” Dr Goldie said.
“Governments can reverse that tide by fixing inequities in our housing and superannuation policy that disproportionately benefit those with the most.”
“The pandemic response highlights the profound impact of government policy on income inequality in our society. Sadly, it was a story of two steps forward, and two steps back when the increased payments were withdrawn and income inequality returned to close to pre-pandemic levels.”
UNSW Social Policy Research Centre Scientia Professor Carla Treloar said while income inequality had remained steady over recent decades, wealth inequality was increasing.
“We can reverse this trend through more affordable housing and a fairer tax and superannuation system,” Professor Treloar said. “Additionally, increasing income support payments permanently will reduce income inequality.”
