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 reveals that while average wealth rose notably, median wealth actually declined in most markets, including Australia. This effect is particularly evident in Australia, where the average personal net wealth climbed by 19% since 2020, but the median wealth contracted by nearly 7%. This suggests that the expanding wealth has favored those at the top, with more than 25,000 people becoming millionaires last year. Australia is not alone in this trend, as median wealth is lower in 18 of the 29 countries analyzed by UBS, with significant declines in Germany, the US, and the UK. In contrast, median wealth has increased in Japan, India, and South Korea. The widening wealth gap is a complex issue, with housing being a major driver of inequality. Property wealth and compulsory superannuation have contributed to Australia's high median net wealth, but the country's tax system does little to address the market forces driving increased inequality. This has led to calls for an inheritance tax, with economists arguing that it is particularly compelling given the large amount of wealth that will be passed from boomers to their kids in the next 25-30 years. The report also highlights the growing consensus among international bodies that widening inequality detracts from economic growth, with wealthy people saving more and populist policies being a reaction to this issue. In my opinion, this report raises a deeper question about the sustainability of our economic systems and the role of policy in addressing inequality. It is a reminder that the benefits of economic growth are not evenly distributed and that we need to take action to ensure a more equitable distribution of wealth.
