The wealth gap in Australia is widening, with the median wealth of Australian adults falling by nearly 7% since 2020, despite the rich getting richer. This is according to a recent report from the Swiss bank UBS, which highlights a growing divide between the wealthiest and the broader population. The report also notes that the number of millionaires in Australia has increased by more than 25,000 in the past year alone.
What makes this situation particularly interesting is the contrast between the average and median wealth figures. While the average personal net wealth in Australia has climbed by 19% since 2020, the median wealth has contracted by nearly 7%. This suggests that the expanding wealth has favored those at the top, with the richest claiming an ever-greater share of the pile. This trend is not unique to Australia; median wealth is lower in 18 of the 29 countries analyzed by UBS, with significant declines in Germany, the US, and the UK.
The biggest driver of inequality by wealth is housing, according to independent economist Saul Eslake. Property wealth and compulsory superannuation have contributed to Australia's third-highest median net wealth in the world, at nearly $306,000. However, Eslake argues that Australia's tax system does little to mitigate the market forces driving increased wealth inequality. He advocates for an inheritance tax, particularly given the substantial amount of wealth that will be passed from boomers to their kids over the next 25-30 years.
The report from UBS and Eslake's analysis raise important questions about the impact of wealth inequality on economic growth. While some argue that high inequality is not technically bad for economies, there is a growing consensus among major international bodies that widening inequality detracts from economic growth. This suggests that the widening wealth gap in Australia may have broader implications for the country's economic health and social stability.
In conclusion, the widening wealth gap in Australia is a complex issue with significant implications. It highlights the need for a more equitable distribution of wealth and a tax system that better addresses the market forces driving inequality. As the report from UBS and Eslake's analysis suggest, the current situation may have broader implications for the country's economic health and social stability.
