New research indicates that while Australia’s average wealth has increased, the median wealth has fallen nearly 7% since 2020, highlighting a growing divide between the wealthiest citizens and the broader population.
Australia’s economic landscape is witnessing a troubling trend, as new findings from the Swiss bank UBS reveal that the nation’s median wealth has decreased by nearly 7% since 2020, despite a significant increase in the wealth of the richest citizens. This disparity reflects a broader pattern of growing inequality observed globally, as more than 25,000 Australians became millionaires last year.
The UBS Global Wealth Report highlights 2025 as a noteworthy year, marking the creation of nearly one million new millionaires worldwide—a record increase in a single year. However, the report cautions that these gains have been unevenly distributed, with the average wealth rising significantly while median wealth has declined. This phenomenon underscores the importance of distinguishing between average and median wealth, as the latter provides a clearer picture of the typical wealth levels among the population.
Wealth Disparity in Australia
According to the UBS report, while the average personal net wealth in Australia climbed by approximately 19% during the first half of this decade—factoring in the effects of persistent inflation—the median wealth for Australian adults fell to around $210,783 (A$306,000). This figure positions Australia as having the third-highest median net wealth globally, trailing only Luxembourg and Belgium. In stark contrast, median wealth has experienced a decline in 18 out of the 29 countries analyzed by UBS, including significant drops of around 20% in Germany, the United States, and the United Kingdom.
Independent economist Saul Eslake noted that Australia has not witnessed as dramatic an increase in income inequality compared to other similar nations. However, he emphasized that wealth inequality has surged, primarily driven by factors such as housing and compulsory superannuation. Eslake commented, “The biggest driver of inequality by wealth is housing.” This observation aligns with the broader trend of property wealth contributing significantly to individual net worth in Australia.
Global Context of Wealth Inequality
While Australia grapples with its unique challenges regarding wealth distribution, it is essential to recognize that it is not an isolated case. The report indicates that median wealth has surged by 50% in Japan, 20% in India, and more than 10% in South Korea during the same period. Conversely, the United States, despite having the second-highest average level of wealth, ranks 28th out of 30 countries when measured by median wealth.
Eslake expressed that the implications of rising inequality on economic health remain a topic of debate among economists. He stated, “It is contested territory whether high and rising inequality is technically bad for economies.” Nevertheless, he pointed out that there is a growing consensus among major international organizations, such as the International Monetary Fund (IMF) and the Organisation for Economic Co-operation and Development (OECD), that beyond a certain threshold, increasing inequality can detract from economic growth.
One argument suggests that affluent individuals tend to save a higher proportion of their income, which could hinder overall economic expansion. Furthermore, the rise of populist policies, often viewed as detrimental to economic progress, can be partly attributed to growing inequality.
Potential Policy Responses
Australia’s progressive income tax and transfer system has played a role in reducing income inequality; however, Eslake argues that it does little to address the market forces exacerbating wealth inequality. He advocates for policy reforms, including the introduction of an inheritance tax, as a potential solution to the wealth inequality challenge. Eslake noted, “The case for such a tax is particularly compelling given that about $5.5 trillion of wealth will be passed from boomers to their kids over the next 25-30 years, with most of those ‘kids’ being in their 50s and 60s when they receive it.”
He proposed that it would not be unreasonable to tax estates valued at $5 million or $10 million, with exemptions for surviving spouses or partners. Additionally, he suggested that a property-based land tax could serve as an alternative to stamp duty on property transactions, helping to address the wealth distribution issue more effectively.
As Australia navigates its economic landscape marked by increasing wealth inequality, the implications for social cohesion and economic health remain critical areas for policymakers and economists to address. The ongoing discourse will likely shape the future of wealth distribution and economic policy in the country.
