New report shows who is most impacted by inequality in Australia

A new report by ACOSS and UNSW Sydney shows that, pre-COVID, single people on JobSeeker, even those with some paid work, and single parents on JobSeeker, have been struggling on the lowest rung of the household income scale. Over half are in the lowest 10% of incomes nationally. Half of people on age pensions are in the lowest 20% of incomes nationally, though widespread home ownership among this group provides a significant degree of protection from poverty. The 10% of older people who rent their homes are in a much more financially distressed position. The report – Inequality in Australia 2020: Part 2, Who is Affected and Why – sets a base-line of data against which to assess the impact that COVID-19 is having on inequality in Australia. It reveals where different groups fit in the income and wealth scales, and the direct causes of inequality from the latest data available, 2017-18. Professor Carla Treloar, Director of the Social Policy Research Centre, UNSW Sydney, said: “Even…

Inequality in Australia 2020, Part 2: Who is affected and why

Read the report: Inequality in Australia 2020, Part 2: Who is affected and why Where do you stand in Australia's income distribution? Find out now with our income calculator!

New research highlights risk of COVID pandemic increasing inequality

New analysis of inequality in Australia pre-COVID-19 provides a baseline against which to measure the impacts of the pandemic on income and wealth inequality. It highlights the ameliorating effects of timely Government policy responses – including increased Jobseeker and Jobkeeper payments – but warns that the long-term effect of the pandemic on income and wealth inequality will depend on how these policies evolve. Using the latest available ABS data (2017-18), the ACOSS/UNSW Sydney Poverty and Inequality Partnership Report finds that, pre-COVID, the incomes of those in the highest 20% were 6 times higher than those in the lowest 20%, with that gap widening since 2015-16 (when the ratio was 1:5). An examination of wealth data shows that, for the first time, average household wealth exceeded $1 million in 2017-18. However, the distribution of wealth in Australia was deeply unequal, with the average wealth of the top 20% ($3,255,000) some 90 times that of the lowest 20% ($36,000). Those…

Average net wealth, by wealth group

This graph shows the distribution of wealth by wealth groups. Wealth is distributed much less broadly than income  2017-18: The average wealth of the highest 20% wealth group is $3,255,000, more than six times that of the middle 20% who had $565,000; and over 90 times that of the lowest 20%, who had $36,000. The average wealth of the highest 5% is $6,795,000. 2015-16: The highest 20% wealth group had average wealth holdings of $2.9 million, more than five times that of the middle 20% wealth group ($537,000) and almost 100 times the $30,000 held by the lowest 20% wealth group.

Trends in average wealth by wealth group

This shows changes in the 'real value' (after inflation) of net household wealth. Wealth inequality increased more sharply than income inequality between 2003-04 and 2015-16. Click here to see the income inequality trends. The average wealth of the highest 20% wealth group rose from $1.9 million in 2003-04 to $2.6 million in 2009-10, declined to $2.4 million in 2011-12 (after the Global Financial Crisis) and rose again to $2.9 million in 2015-16. Trends in the value of wealth holdings of the remaining 80% changed much less in comparison.

Shares of national wealth by wealth group

This graph shows how wealth is divided up among households. This probably underestimates of the true extent of wealth inequality. The wealthiest 1%, who own a disproportionate share of all wealth, are a small number of people and so are underrepresented in household surveys. It is also likely that many under-report their wealth.  See the pie chart showing shares of income by income group. 2017-18: The wealthiest 20% holds 64% of all wealth, followed by 20% for the next wealthiest group. The remaining 60% of households have just 17% of wealth between them. 2015-16: The highest 20% of household wealth groups holds 62% of all wealth. The middle 20% wealth group holds 12%, and the lowest 20% wealth group holds less than 1%.   Wealth is highly concentrated at the very top. The highest 10% wealth group owns 45% of all wealth while the highest 5% owns 32% and the very highest 1% holds 15%. So the share of the highest 1% (15%) is greater than the middle 20% (12%). In contrast, the combined…

Profile of wealth holdings of wealth groups

This graph shows the components of wealth for each wealth group. The profile of assets held changes as we move up the household wealth scale.  2017-18: The holdings of the lowest 20% wealth group are mainly in 'other non-financial assets' such as cars (48% of heir wealth holdings) and superannuation (38%). Few own their homes. Moving up, the proportion of wealth held in owner-occupied housing rises (from 29% for the second-lowest wealth group to 51% for the second-highest). The proportion held in superannuation declines from 33% to 21%. In the highest wealth group, relatively less of the wealth is in the main home (34%) than those in the middle, and more of it in shares and other financial investment (26%) and investment property (15%). 2015-16: Most of the wealth of the lowest 20% wealth group is in low-value assets such as cars and home contents (49%) and superannuation (40%). The average net value of owner-occupied housing held by this group is just $2,000, which strongly suggests…

Wealth distribution among income groups

Wealth is more evenly distributed across income groups than across wealth groups. The highest 20% of households by income hold 42% of household wealth, compared with 15% for the middle 20% and 11% for the lowest 20%. The main reason for the more even distribution of wealth among household income groups is the high home ownership rate among older people, who tend to have lower incomes. This is likely that this will change in future as a declining share of older people  own their main home The highest 20% income group holds 30% of all wealth in main residences, compared with 17% for the middle 20% income group; and 16% for the lowest 20% income group. Other forms of wealth are much less evenly distributed across household income groups. The highest 20% income group owns 60% of all shares and other financial assets, 53% of investment real estate, and 46% of superannuation wealth.

Value and profile of household wealth for each income group

This graph shows the distribution of wealth across income groups. It is more evenly distributed than across wealth groups, due largely to high levels of home ownership among retirees. 2017-18 The wealth of the highest 20% by income is valued at $2,148,000, almost three times as much as the middle 20% and four times as much as the lowest 20%. The average value of wealth in owner-occupied homes is fairly consistent across income groups, with four of the five groups holding no more than $400,000 in wealh in this form. The highest 20% have homes worth an average of $496,000 after mortgage debt is subtracted. Shares and other financial assets are heavily concentrated in the hands of the highest 20% by income. Their average holdings are worht $622,,00 - five times that of the middle 20% ($124,000) and nine times that of the lowest 20% ($73,000). The avearge superannuation wealth of the highest 20% is $496,000, three times that of the middle 20% ($179,000) and nine times that of the lowest…

Trends in average wealth by wealth group

This chart shows the real value (after inflation is taken into account) of average wealth holdings of each wealth group, compared over time. As with income inequality, changes in wealth inequality were driven mainly by the highest 20% wealth group, although this growth was more volatile than for middle and low wealth groups. This was due in part to the greater share of the wealth of the highest 20% held in financial assets such as shares. The average household wealth of the highest 20% rose from $1.9 million in 2003-04 to $2.6 million in 2009-10, declined to $2.4 million in 2011-12 and rose again to $3.255 million in 2017-18.