Yesterday’s annual wealth report from Credit Suisse bolsters the claim that Australia, in 2013, swapped one of the world’s best economic management teams for one of the worst.
From 2010 to 2013, this rigorous survey of household and national wealth by the Zurich-based finance group tracked the impressive trajectory of Australia’s economy through the global financial crisis. Since then, it has tracked its decline.
In 2013, Australia’s wealth was US$402,578 (A$544,500) per adult. That was the second highest in the world, behind tiny Switzerland on $512,562. (US dollars are used hereafter, as in the report.)
Each year since 2013, Australia’s wealth per adult has steadily declined to just $375,573 in 2016. That is well behind both Iceland ($408,595) and Switzerland ($561,854).
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Australia’s median wealth in 2013 was an impressive $219,505, the highest in the world by a fair margin. Luxembourg was second on $182,768. Australia is now down to $162,815, which is third in the world behind Iceland and Switzerland and just ahead of Belgium. Median wealth reflects the fair distribution of wealth among the population better than the mean average.
Credit Suisse’s analysts observed in 2013 regarding Australia:
“Interestingly, the composition of wealth is heavily skewed towards real assets, which amount on average to $294,100 and form 59% of gross household assets. This average level of real assets is the second highest in the world after Norway. In part, it reflects a sparsely populated country with a large endowment of land and natural resources, but it is also a manifestation of high urban real estate prices. Compared to the rest of the world, very few Australians have net worth below $10,000. One reason for this is relatively low credit card and student loan debt. The proportion of those with wealth above $100,000 is the highest of any country — eight times the world average.”
The latest report offers no comfort for Treasurer Scott Morrison and Finance Minister Mathias Cormann, who insist, in almost every public utterance, that “Australia is battling strong global economic headwinds”. This is not true and has not been true since the GFC wound down in 2013.
There are 34 wealthy, developed countries in the Organisation for Economic Cooperation and Development (OECD). As shown here and elsewhere, the majority are advancing steadily on most indicators of economic health. Australia is the conspicuous laggard.
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Yesterday’s wealth report shows a clear majority of OECD countries are getting richer. In 2016, 21 countries increased their mean average over last year. Another two — Israel and the United Kingdom — dipped this year after rises the year before. Both are well ahead of where they were in 2013.
Only nine of the 34 economies have experienced declining wealth per adult every year since 2013: Australia, Finland, Greece, Italy, Mexico, Norway, Poland, Sweden and Turkey.
Morrison is keen to compare Australia with the big G7 economies — when it suits him. Now is not one of those moments. Canada, France, Germany, Japan and the USA all increased average wealth per adult in 2016. The UK, while well down this year due to currency depreciation following the Brexit vote, surged in the two previous years and is now substantially richer than in 2013. Only Italy in the G7 had its wealth decline in 2016, but only by 1.13%. Australia’s decline was 1.37%, clearly the worst of the G7 plus one.
Intriguingly, only two developed economies have increased wealth per adult every year since 2013 — South Korea and the US. So this data confirms Australia’s struggles under its current hapless regime but also underscores the strong performance of the US economy under its impressive outgoing administration.