Australia’s wealth continues to shift to the wealthy, according to the latest Credit Suisse global wealth report. Meanwhile our world ranking and GDP per adult continue to tumble. Alan Austin reports.
MOST HARD-UP Australians know, from looking at their bank statements and unpaid power bills, that they are poorer now than a year ago. Most well-off Australians know, from their dividend reports and growing wine cellars, that they are richer.
As a new report confirms, 2018 has been an excellent year for Australia’s top 10 per cent.
Credit Suisse’s annual global wealth report and wealth databook — which includes the increasing number of Australian millionaires — has confirmed that shifts in wealth since 2013 from the working and middle classes to the rich are continuing.
Mean and median wealth
If the wealth of any country increases overall, with all sectors enjoying prosperity, then both mean wealth and median wealth will increase. Median wealth is the point above and below which sit exactly half of the population. So if most of the increased wealth goes to the lower end, the median wealth will show a stronger rise than the mean. If most goes to the top end, the median wealth will decline.
The latter happened in Australia in 2014 and 2015, as the tax burden and costs of living began to disadvantage the vast majority. It has happened again this year. Mean wealth increased from $402,603 to $411,060. But median wealth fell from $195,417 to $191,453. (All values are in US dollars, as in the original reports.)
So the country is richer overall, but most of the benefit has gone to the wealthy.
The top 10 per cent
The percentage of Australia’s entire wealth held by the richest 10 per cent has increased significantly since 2013. The average for Labor’s last three years — 2011 to 2013 — was 50 per cent exactly. It rose to 51.1 per cent in 2014, then to 51.3 per cent in 2015. It peaked at 52.7 per cent in 2016, then settled back last year to 52.3 per cent. It is now back up to the all-time high of 52.7 per cent.
Wealth of the poorest half
Half the population owned 10.4 per cent of all Australia’s wealth in 2012 and 2013, Labor’s last two years in office. Not much, but way higher than 7.7 per cent back in 2010 when the Credit Suisse series began. The percentage actually fell during 2014 and 2015 to 10.2 per cent, then collapsed in 2016 to 6.2 per cent. That was apparently a statistical blip, as the level improved in 2017 to 9.5 per cent.
This year’s percentage is 9.1 per cent which confirms that 2016 was an aberration, but also that the steady decline under the Coalition is continuing.
National earnings per person
The most dramatic deterioration in Australia’s fortunes during the current global boom in trade, investment, jobs and profits has been in gross domestic product per adult. This measures the total income Australians enjoy from all sources.
This increased impressively through the Labor years — despite the global financial crisis — then more gradually through to 2016. Last year, however, it collapsed by almost 30 per cent — from $99,452 per adult down to $71,403.
This was not a statistical aberration, as the level this year remains at $77,007 per adult, a slight improvement on 2017 but still way below levels for most of the last decade.
This was attributed last year to the decline in the Aussie dollar, the severe drop-off in productive capacity as reflected in construction, falling hours worked per person per month and the loss of billions in untaxed corporate profits shunted offshore.
Nothing much has changed this year.
On most measures, Australia’s ranking in the world has tumbled since 2013 as the economy has failed to take advantage of the current global boom.
Australia’s share of the world’s total wealth has fallen from 2.78 per cent in 2013 — the highest on record — to 2.40 per cent now — the lowest.
Ranking on mean wealth is down from second in 2013, behind Switzerland, to fourth now, also behind Iceland and Luxembourg.
Median wealth was highest in the world from 2011 to 2014, but slipped to second in 2015, behind New Zealand (oh, the shame of it!) and third for the following two years, behind Switzerland and Iceland. It has just moved up to second again, still behind Iceland.
They seem to do a lot of things well in Switzerland, including providing very handy data on how well global economies are being managed. Or how badly.
Alan Austin is a freelance journalist with interests in news media, religious affairs and economic and social issues.
You can follow Alan on Twitter @alanaustin001 .
The above article was published in Crikey and is republished with permission.
Public support is vital so this website can continue to fund investigations and publish stories which speak truth to power. Please subscribe for the free newsletter, share stories on social media and, if you can afford it, tip in $5 a month.