The wealth of the richest 200 people in Australia is equivalent to nearly a quarter of national GDP, with researchers warning that if this trend continues, wealth disparity will soon destroy any remaining semblance of equality in Australian society.
The wealth of the very rich has more than tripled in the past two decades, from 8.4% of Australia’s GDP in 2004 to 23.7% of GDP in 2024, with the top fifth of households holding wealth 146 times greater than the bottom fifth, according to research released on Tuesday by the Australia Institute.
Growth in capital gains – that is, increases in the value of assets, most of which is yielded by the already wealthy – has started to outstrip the national wages bill, held in check over the past 20 years only by the global financial crisis in 2008 and the Covid-19 pandemic in 2020, the report said.
Meanwhile, cost-of-living pressures have hit people living in poverty and those on lower incomes, as they struggle to afford basic goods and services while the wealthy benefit from inflated asset values.
Landlords raising rents, and energy retailers price-gouging to benefit shareholders were two examples of inflation keeping low-income earners poor and increasing the wealth of the already rich, according to the report.
There was no way to resolve the cost-of-living crisis and the housing crisis without tackling the wealth disparity at the heart of inequality, the researchers argued. “Although the political barriers to making this change are likely to be substantial, failure to confront the problem will consign the nation to ever-increasing inequality,” the report said.
David Richardson, the senior research fellow at the Australia Institute and one of the report’s authors, said Australia needed new ideas and policies to fix rapidly growing wealth inequality.
“Australia is getting more unequal,” Richardson said. “It’s harder to realise our collective potential and grow the economic pie when millions of Australians are being forced to fight for crumbs that fall from the tables of the wealthy.”
Tax reform that targeted capital gains and private wealth was essential to addressing rising inequality, the report said, as capital gains and private wealth had “cumulative advantages for a minority within society but make life more difficult for the majority”.
Australia’s current system of exemptions and discounts to capital gains taxes, and the lack of a wealth tax more generally, meant the burden of funding the nation’s public services fell most heavily on ordinary wage-earners, who could least afford higher taxes.
A simple annual wealth tax of 2% on the richest 5% of households would yield billions of dollars in commonwealth revenue that would vastly increase the ability of the federal government to provide services for the majority, the report said.
“Growing economic inequality is making life worse for millions of Australians and holding our country back. The International Monetary Fund and others have shown how economic inequality tends to reduce a nation’s economic growth,” Richardson said.
“Failing to appropriately tax wealth and capital gains has neither an ethical nor an economic justification. Bold policy actions are required to counter our ever-increasing inequality and raise the billions of dollars in public revenue that are currently being foregone.”
