Finance Finance News Major report shows richest 1 per cent has boomed under Abbott, Turnbull

Major report shows richest 1 per cent has boomed under Abbott, Turnbull

Malcolm Turnbull Tony Abbott
The Abbott-Turnbull years have boosted the top 1 per cent's share of national income. Photo: AAP
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Australia’s wealth has become increasingly concentrated in the hands of the top 1 per cent in the past four years, with this group now controlling 23 per cent of the nation’s wealth, a major report by Credit Suisse has found.

The Global Wealth Report, released this month, revealed that Australia, while still a very wealthy country, had tumbled on several global rankings since current Coalition policies took effect four years ago.

The research showed the percentage of Australia’s entire wealth held by the richest 10 per cent had also 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 to 52.3 per cent this year.

The top 1 per cent, meanwhile, saw their wealth rise from an average of 20.1 per cent during Labor’s last three years, to 21.1 per cent in 2014, then 21.4 per cent in 2015. It has continued rising, to 22 per cent last year and 22.9  this year.

In Labor’s last two years, 2012 and 2013, the wealth of the poorest 50 per cent was steady at 10.4 per cent – pretty low, but a great improvement on 7.7 per cent in 2010 when the Credit Suisse series began.

This fell in 2014 and 2015 to 10.2 per cent, then plummeted in 2016 to 6.2 per cent. It appears to have recovered significantly to 9.5 per cent this year.

Median wealth

The ‘median wealth’ measure shows how rich any population is and also, as distinct from the mean average, reflects wealth distribution.

This peaked at a world-high $US209,907 in 2012 when Australia clearly had the world’s standout economy and the Aussie dollar was worth more than the US dollar.

Australia continued to have the world’s highest median wealth until 2014 when the economy began its steep decline. It slipped to second-ranked in 2015, third in 2016 and remains third this year, behind Iceland and Switzerland.

Gini coefficient

This intriguing measure – invented by Italian statistician Corrado Gini in 1912 – quantifies equality of income or wealth in any country via a simple percentage. The lower the percentage, the more equal the sharing of income or wealth.

From ranked 10th in the developed world in Credit Suisse’s first wealth report in 2010, Australia improved its rankings steadily through the Labor years. By 2011, Australia was third-most equal nation, behind Italy and Japan. In 2012 and 2013, Australia rose to second, after only Japan.

Then, post-election, Australia slipped back to third place in 2014 and 2015, then down to sixth in 2016 and 2017. Australia now lags behind Japan, Belgium, Hungary, Romania and the Czech Republic. It is just a fraction of a point ahead of Spain and Italy.

National earnings per person

This year’s most damning statistic is the sudden decline in gross domestic product (GDP) per adult. This plummeted from last year’s level by nearly 30 per cent.

This is attributable partly to the decline in the Aussie dollar. But also to the severe drop-off in productive capacity as reflected in construction, falling hours worked per person per month and the loss of billions in unpaid corporate taxes shunted offshore.

From $US72,414 per adult in the first year in this series, 2010, GDP per adult rose impressively through the Labor years, despite the global financial crisis. In 2013 it was up to $US93,244. It continued to rise in 2015 and 2016, but only by a modest 2.1 per cent each year.

Then, this year, it plummeted from $US99,452 ($130,916) by 28.2 per cent to just $US71,415 ($94,009). That’s the lowest level since the series began and one of the worst collapses in the developed world. Even Venezuela only lost 19.9 per cent this year.

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