Super assets widen gap between rich and poor: report
Growth in superannuation assets contributed significantly to the overall increase of wealth inequality, according to a new report from the Australian Council of Social Service and UNSW.
The overall increase in wealth inequality over the period was mainly driven by superannuation, which grew by 155 per cent in value due to compulsory savings.
The gap between those with the most and those with the least has blown out over the past two decades, with the average wealth of the highest 20 per cent growing at four times the rate of the lowest 20 per cent.
The latest report from the Poverty and Inequality Partnership, Inequality in Australia 2023: Overview, shows that wealth inequality has increased strongly over the past two decades with the average wealth of the highest 20 per cent increasing by 82 per cent and that of the highest five per cent by 86 per cent.
The report also revealed that contrary to the public image of mum and dad property investors, investment housing is very unequally shared, with the wealthiest 20 per cent holding 82 per cent of all investment property by value.
In regard to wealth inequality, the report found that the average household wealth in Australia is the fourth highest in the world, driven mainly by home ownership.
In August, shadow minister for finance, Jane Hume, stressed the importance of home ownership in regard to providing Australians with a “dignified retirement” as proposed in the objective of superannuation legislation.
In a statement made available to SMSF Adviser, Ms Hume argued against the underlying message behind the Labor government’s proposed objective of super, one which rests on the idea that superannuation is aimed to “preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way”.
She said the Intergenerational Report echoed the retirement income review in showing that higher rates of homeownership have been an important component of retirement outcomes for Australians.
“Those that own their own home, generally have lower housing costs in their retirement compared to renters, as well as a store of wealth that can be drawn down on in retirement.
“Everything points to the fact that owning your own home is the biggest indicator of economic security in retirement and that is why we are committed, the Coalition is committed to our policy to allow Australians to use their superannuation to buy their first home and a policy that will particularly support young people and also separated women.
“Our policy to be very clear, allows people to put money from their superannuation into the deposit on their first home, but it requires them to put it back into superannuation plus any growth of the value to ensure that they are no worse off in retirement, but they still get that first important rung on the property ladder”.
The ACOSS report also found that wealth distribution is highly unequal, with the wealthiest 20 per cent holding an average wealth of $3,240,000 – six times the wealth of the middle 20 per cent ($588,000) and 90 times that of the lowest 20 per cent ($36,000).
“This report builds on the Government’s recent wellbeing framework to show that while income inequality has remained relatively steady, wealth inequality has increased over the past decades,” said Scientia professor Carla Treloar, Social Policy Research Centre, said UNSW.
“We can reverse this trend through more affordable housing and a fairer tax and superannuation system.”
Dr Cassandra Goldie, CEO, Australian Council of Social Service (ACOSS), said governments can reverse that tide by fixing inequities in the nation’s housing and superannuation policy that disproportionately benefit those with the most.
