Wealthy Australians are worried we might realise how rigged the system is in their favour

The Guardian

11-06-2025

We need to talk about wealth. The latest dwelling price figures reveal that for the first time the average home price across the nation is above $1m. While that will quite rightly have people concerned about affordability, we need to also think about what this means for wealth and just how unequal our society has become.
A couple of weeks ago the Australian Financial Review released its latest 200 richest list. It was a list of wealth, not income. Income is how much you earn over a set time – usually a year – whereas wealth is the value of everything you own right now.
And my goodness, the wealth of the richest 200 has grown.
My colleague at The Australia Institute, David Richardson, calculated that in 2004, the combined wealth of the AFR richest 200 was equivalent to 8% of Australia's annual GDP. Now they are worth 24.5% of our annual GDP.
Over the past year the wealth of the richest 200 has increased 6.9% to $667.8bn – well ahead of the 3.4% increase in wages.
But that should not be a surprise because wealth generally grows faster than income, and very much so over the past 25 years:
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And if you think that graph looks familiar, it might be because you have previously seen my graph of property prices and household disposable income per capita:
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The link between property values and wealth is rather crucial in Australia because land and the value of dwellings makes up around 55% of the total of Australian household assets (most of the rest are deposits, shares and importantly, superannuation).
And the value of dwelling and land has grown much faster than income over the past decade:
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We can look at the house prices and see that in Sydney the median established house is now $1.395m, or that in Adelaide it has risen in the past year from $769,000 to $842,500 (a 9.6% increase), and bemoan the further falls in housing affordability. But we also need to think about what these rises in values means for those who hold them – and the ones who don't.
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The housing figures we cite each quarter for house prices are actually titled Total Value of Dwellings. The Bureau of Statistics estimated the total value of Australia's dwellings in the March quarter this year at $10.9tn. Yes, trillion.
That was a $125.3bn increase from the December quarter last year.
By contrast, in the first three months of this year, Australians were paid $300.2bn in wages and salaries, up $4.35bn from the 2024 December quarter.
That means in one quarter the value of housing stock owned by households (ie not including property owned by governments or businesses) went up $125.3bn while the value of wages paid went up just $4.35bn.
If you are starting to think owning property might be a good way to get some wealth and worsening housing affordability means fewer people are able to accumulate wealth, then you are right.
The total $10.9tn is now four times the value of Australia's annual GDP. As economist Alex Joiner noted, that is well above the value of US housing stock and it's a major drag on our productivity, because land, to be honest, doesn't do anything except generate wealth.
And wealth is very much more concentrated at the top than is income.
The survey on income and wealth from the Australian Bureau of Statistics in 2019-20 revealed that the richest 20% held 48% of total household income. That might seem bad enough, but in the same year the top 20% held 62% of all wealth:
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Wealth also grows faster at the top.
Income inequality in the decade from 2009-10 was relatively stable. But the wealth of those in the 90th percentile (ie wealthier than 89% of Australians) grew by 39% compared with just 24% for those in the 40th percentile:
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And here's the kicker: we tax income quite well; we barely tax wealth at all.
Remember that $4.35bn increase in wages and salaries? Most of that would be captured by income tax.
What about that $123.5bn increase in dwelling value? Barely any of it is taxed at all. A very small part of it will get captured by increased council rates or land tax, but for the most part, as with all forms of increased wealth, it is barely touched by the tax office.
And this is the point behind those fighting against the absurdly small changes to tax on superannuation. Barely anyone will get hit by it – maybe 0.5% of us. And even if for some weird reason we would go 30 years and 10 federal elections without the $3m threshold being changed, you would need to squint and shuffle some numbers around to have maybe 10% affected.
The current median superannuation balance for men in their early 50s is around $162,000; for women it is $111,000. You really think $3m is anything even remotely possible for most people?
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So why the ruckus? The same reason there is massive noise about any changes to the capital gains tax discount: wealth.
Those with wealth like property prices rising because that increases their wealth, and they love that the capital gains tax discount gives them a 50% tax break when they generate even more wealth.
The attempts to change superannuation tax concessions has worried the extremely wealthy that people will realise just how rigged the system is in their favour. And they worry it might finally be the start of attempts to address the growing wealth inequality in this country. It should be.
Greg Jericho is a Guardian columnist and policy director at the Centre for Future Work