Wealth and Inequality

Editor: Justin Healey
ISBN 978 1 920801 36 6
Year 2005

Price: $20.95

  

Wealth and Inequality
Volume 226, Issues in Society

Economic inequality has grown in Australia during the past decade. The richest 20% of Australian households own 63% of all net wealth in the country; the bottom 20% own just 0.2%, according to a recent Reserve Bank report. Australia’s wealth is concentrated among people who are older, own homes and are university graduates; 54% of Australian’s wealth is made up by property ownership. By contrast, at least one million people live in poverty. This book explores the growing gap between the rich and poor – who are the most disadvantaged groups in Australia, and what can be done to break the cycle of rising inequality?

Chapter 1  Wealth Distribution in Australia
Household income; Growth in income up with world best; Aussies world’s ‘best paid’; The $50,000-a-year worker – but that’s just average; Healthier, wealthier ... and wiser; We’re richer than ever – on the house; Property puts us in the money; Rich still getting richer; Rich get richer – and more common; We can’t blame CEOs for the rich-poor divide; What does a ‘rich list’ tell us about wealth distribution?; Money can buy happiness after all; Resistable lure of the lucre – six figures is enough for most; It’s a bit rich: the wealthy can give far more.

Chapter 2  Poverty and Disadvantage
Inequality in Australia; Getting the facts about poverty; Poverty report reveals awful truth of a nation in need; Poverty growing faster than in most countries; At least one million live in poverty; Ranked poorly over poverty; Poverty relatively transient; Health chasm between rich, poor widening; Poverty: children and young people in Australia; Australia not immune to child poverty; Income support and poverty; Devising a plan for the forgotten people; Time to tackle the cycle of disadvantage – the underclass; Australia’s real battlers have been forgotten; The inequality trap.

Glossary; Facts and Figures; Additional Resources; Index



FAST FACTS from this volume
  • In real terms, equivalised disposable household income for Australians of all ages increased by an average of 12% between 1994-95 and 2000-01. Over the same period, the average real equivalised disposable household income of people in the low income group grew by 8%, while the increases for people in the middle income and high income groups were 11% and 14%, respectively.
  • Wages and salaries were the principal source of income for 57% of Australian households overall in 2000-01. Government pensions and allowances were the main source for a further 28% of households.
  • There were over half a million households comprising a lone parent with dependent children. People living in these households received the lowest average equivalised disposable household income ($329 per week) for any type of household in 2000-01.
  • Over half (53%) of one-parent households were reliant on government pensions and allowances as their principal source of income.
  • Australians are not only earning more than they were six years ago, they are also earning more than most other people in the world. The OECD’s annual review of wages and taxation shows the average after-tax income of Australians is second only to Korea’s.
  • Over the period of 1996 to 2004, Australian workers have had real wages growth of 11.9 per cent, compared to an OECD average of 10.8 per cent. Between 1983 and 1991, the real wages of Australian workers had dropped by 4.2 per cent.
  • Average weekly ordinary-time earnings for full-time workers climbed to $961.80 in August 2004 – an annual salary of $50,013.
  • It took 81/2 years for the average wage to climb from $30,000 to $40,000 in February 2000, but only half that time to move from 40,000 to $50,000. The average wage has doubled since 1988.
  • Our income has been growing at 2.8 per cent a year over the past decade, with national income per head reaching $30,000. This is much more rapid than the 1.7 per cent a year rise in national income over the previous two decades. The rapid growth has been a result of improved productivity.
  • The national wealth per capita has also been rising, although this has been at a more subdued 0.6 per cent a year over the past decade ... our assets have been growing by 1.8 per cent a year, but debts have also been rising.
  • The national wealth includes not only personal assets but also business, land and financial assets. Land accounts for 28 per cent of the total, dwellings 19 per cent, other buildings 20 per cent and machinery 9 per cent. Financial assets such as shares represent 12 per cent of our net wealth.
  • The new record in private wealth – $5000 billion – equates to $250,000 for every man, woman and child in the country, compared with $126,000 in mid-1997.
  • The average house price has more than doubled since 1996 and the share price index has almost doubled in the same period.
  • The richest 20 per cent of Australian households own 63 per cent of all net wealth in the country, while the bottom 20 per cent own just 0.2 per cent, the Reserve Bank has revealed.
  • The number of so-called high net worth individuals (HNWIs) in Australia is already at a record high and is rising at one of the fastest rates in the world. The ranks of Australia’s rich have swelled by 47 per cent in the past five years, as the HNWIs increased their collective wealth by $74 billion to $231 billion.
  • Despite a year-long inquiry, the members of the Senate community affairs committee could not even agree on how to measure poverty rates. The inquiry found 21 per cent of Australians are surviving on less than $400 a week, which is below the $431 minimum wage. One million people are classed as poor, despite the fact that they live in households where at least one adult works. Over 700,000 children are growing up in homes where neither parent works.
  • A decline in the income of poor households was to blame for the financial stress they were suffering. Between 1984 and 1999, the top 20 per cent of wealthy Australians enjoyed a 1 per cent increase in their disposable income. The poorest 20 per cent suffered a 10 per cent slump in disposable income.
  • It is estimated that between 479,000 and 743,000 dependent Australian children (all children aged less than 15 and all 15- to 24-year-olds engaged in full-time study and living at home) live in poverty. The lower estimate shows close to one in ten Australian children live in poverty.
  • Conservatively, there were 145,000 young Australians aged 15-24 years living in poverty in 2000. It is estimated that half of these young people were living at home and 60% of the 145,000 were male.
  • The 2004 Senate inquiry into poverty and financial hardship examined a number of ways of measuring poverty in Australia and concluded that there is a “consensus that the numbers of Australians living in poverty generally ranges from 2 to 3.5 million.”
  • Australia has 14.7 per cent of children living in poverty, which has fallen 1.7 per cent in the past decade according to a UNICEF report. Along with the US, Britain and Norway, only these four countries reported a drop.
  • We now have an underclass that runs the risk of handing disadvantage down the generations. Of the 1.96 million families with dependent children, 357,000, nearly one in five, have no breadwinner.
  • In a climate of relative economic growth and wealth the message that the divide between the haves and have-nots is growing is simply not getting through. The fact that one-tenth of Australian households now own 45 per cent of our wealth while half of households own only 7 per cent is unknown by most.