Imagine watching a march-past of the whole Australian population. It lasts a hundred minutes. The people file past your vantage point in order of their wealth; starting with the poorest and ending with the richest. Each household is represented by one individual whose height is proportional to the total wealth of that household in the year 2002 – at a rate of one centimeter for every thousand dollars.
For the first four minutes there is absolutely nothing to be seen. The people marching past are, in effect, burrowing under the ground. These are the four percent of Australian households whose debts are bigger than their assets. They have "negative net wealth".
Then some tiny figures start to appear. Yet after ten minutes they are only four centimeters (i.e. $4 000) high. As the parade continues the average height slowly and steadily increases. At the 30-minute mark, however, the marchers’ height is still only just over 80 centimeters tall. It is beginning to look like an endless parade of dwarfs.
At the 50 minute mark, exactly half way through the parade, the height of the marchers has risen to nearly 2.2 metres. These households represent middle Australia. Typically, their home is the bulk of their wealth, although some also have rental "investment" properties, some are "mum and dad" shareholders and nearly all have wealth tied up in superannuation funds.
During the last 20 minutes of the parade really huge people come into view. At the ninety minute mark the average height is nearly 9.4 metres. With each minute after, the average height rises by more than the total increase in height that had occurred in the whole of the first half of the parade. Then in the last minute veritable giants appear, all over a hundred metres high.
Right at the end come the people on the BRW (Business Review Weekly Magazine) "rich 200" list. Any onlooker who blinks might miss seeing them because they comprise only the last sixth of a second in the parade. The shortest of this elite group is 930 metres tall – five times taller than the loftiest skyscraper buildings in Australian CBDs. Bringing up the rear is the tallest individual, Kerry Packer: at nearly 60,000 metres, puncturing the stratosphere.
This is a dramatic way of describing the overall distribution of wealth in Australia. It is based on information from a survey of the assets and liabilities of Australian households, analysed in a report by the Reserve Bank of Australia released in April 2004. It gives a broad picture that sets the BRW "rich 200" in perspective. It also raises many questions. What determines the extent of wealth inequality? How has the extent of wealth inequality been changing over time? Is this wealth inequality a good thing, economically and socially, or a source of discord, undermining social cohesion?
Analysing the Rich List
We can probe these questions by looking at the BRW ‘rich 200’ data over the last decade in more detail. Of course, trying to infer something about society as a whole from information on approximately 0.001 per cent of the population is a tall order.
Certainly the wealthy have become much wealthier. To get on to the BRW "rich 200" list in 1993 required a mere $30 million: by 2003 this had risen to $94 million. Even allowing for inflation, this represents a substantial hike in the price of the entry ticket to the rich list.
The concentration of assets among the super-rich themselves has also increased over time. When the BRW list was introduced in 1983 the share of the top ten asset-holders in the wealth of the top one hundred was 25%. In other words, the wealthiest ten people had a quarter of the total wealth of the top hundred. The corresponding figure was in the 39-41% range for each year in the period 1997-2003.
It is also interesting to probe how the sources of concentrated wealth have changed over the last decade. Media, retail industry and the development of shopping centers also feature increasingly prominently among the wealth sources of the top ten. Property stands out as the most important single source of wealth. 48 "property barons" had a combined wealth of $16.7 billion last year, well ahead of services and manufacturing industries as sources of wealth.
What underpins these trends?
Broadly speaking, two forces have shaped the concentration of wealth in Australian society. One is asset price inflation. The decade of the 1990’s in particular was remarkably buoyant for share prices. The growth in real estate values, only recently coming to a temporary halt at the end of a prolonged and dramatic property price boom, has widened the gulf between existing land and property owners and those aspiring to join this group. The dominant effect of asset price inflation is to intensify the advantaged position of those holding the greatest initial wealth.
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