Brutal truth about average Aussie’s money
Australia's wealth has grown by 90.5 per cent since the global financial crisis but the benefits have not been spread evenly, new analysis has revealed.
The Roy Morgan Wealth Report, released today, looked at the growth in Australia's personal wealth from 2007 to 2019.
In general, it found Australia's net wealth increased by 90.5 per cent ($4107 billion) over the 12 years.
Net wealth is calculated by adding up the value of assets and then subtracting debts such as home loans.
If you factor in the increase in prices to food and other goods and services using the consumer price index (CPI), wealth still increased by 47.6 per cent.
So overall Australians are getting richer.
However, if you look at the median figure, a different picture emerges.
The median looks at an Australian whose wealth is exactly in the middle between the richest and poorest in the country. It represents the average Aussie.
This person has a net wealth of about $1.7 million, an increase of 26.3 per cent since 2007.
But if you factor in CPI, then this person's wealth has actually dropped by -2.2 per cent.
The figures highlight how data about wealth can be interpreted differently but also that the growth in Australia's net wealth has not been spread evenly throughout the population.
When Australians are spilt into 10 segments according to their net wealth, figures show people in the top tier have increased their wealth by 60 per cent since 2007, from an average of $1.2 million to $1.9 million.
In fact, the top 30 per cent all saw increases to their wealth of more than 60 per cent.
It was a different story for the lowest 10 per cent, who are in "pockets of pain".
While their wealth still grew, it went from -$20,000 to -$19,000. So the poorest Australians still had negative wealth and this only improved by about 4 per cent.
On average, the bottom 50 per cent of Australians saw their wealth increase by 27 per cent, while the top 50 per cent increased by 58.7 per cent.
The wealthiest have also increased their share of the country's wealth.
The top 10 per cent now hold 47 per cent of net wealth in Australia, an increase of 0.5 per cent.
The bottom half of the population now holds just 3.6 per cent of the country's net wealth, a decrease of 0.9 per cent.
The sixth- and seventh-highest segments also saw their share go backwards by 0.9 and 0.2 per cent.
But the eighth-highest segment increased by 0.5 per cent and the ninth increased by 0.9 per cent.
One of the reasons the wealthiest have seen their assets grow so much is because of population growth, and the associated flow of money into the property market, which is driving most of the increase in Australia's wealth.
In presenting the figures, principal researcher Michele Levine described the situation as "pretty extreme".
While all Australians have seen their wealth go up, the figures show the rich are getting richer, and the poor are getting "less richer".
"I find this growth level at the top end pretty stark, with huge potential for distrust," she said.
Ms Levine believes this could be a major issue as wealth inequality can breed distrust in society and makes the country inherently fragile.
"Anything that has real extremes like that is vulnerable to anger, people drop out of society, they don't want to be part of it."
Roy Morgan's research has also shown "bubbling fragility" with massive levels of distrust in politics, the government and big corporations.
To address this, Ms Levine believes those in lower wealth segments shouldn't be seen as just "a bucket of poor people who are all the same".
They could be people who have never managed to get into the property market or worked enough to build up their superannuation. Or they could be students who are struggling at the moment but will eventually transition into higher brackets.
They can also be young families, who are struggling with their income or childcare costs after the birth of their first child.
"We've got people with different reasons that need different policy solutions," Ms Levine said.
The figures also showed that older Australians were the wealthiest, something Ms Levine attributed to "luck of the draw" for being born at a time when the country was enjoying massive growth.
Current generations will likely not be as lucky as inflation now sits about 1 per cent.
The inequality could become more of an issue as the growth in wealth begins to falter.
Australia's wealth reached a tipping point in December and began tracking downwards, which was mostly due to the drop in average property prices.
While real estate agents are reporting things are picking up, Ms Levine said there was not a lot of good evidence to explain why they would be.
She said Australia's wealth was vulnerable to anything that threatened population growth and exports, including mining, education, tourism and trade with China.
"We are kind of a weird country. Our wealth comes from mining (but) we hate mining, our wealth comes from Chinese students (but) we complain about Chinese students, our wealth comes from people coming from outside as tourists (but) we complain about that," Ms Levine said.
"The reality is we need population growth, we need these industries to actually survive and if they don't flourish and survive, it will have an obvious impact on our wealth."