\u2018It\u2019s going to be very unequal\u2019<\/p>\n
Guy Debelle, a former deputy governor of the Reserve Bank of Australia, has called the intergenerational wealth transfer one of the biggest challenges the country will face in the near future. Australia now has the second-highest median wealth in the world and nearly 2 million millionaires \u2013 in US dollar terms<\/a>. More than half of personal wealth in the country is tied up in property.<\/p>\n \u201cSo it matters whether you have a parent with an expensive house or not,\u201d Debelle says. \u201cIf you\u2019re renting and your parents are renting, then you\u2019re not going to get that wealth transfer from housing.\u201d<\/p>\n Sign up: AU Breaking News email<\/a><\/p>\n That wealth will come in greatest volume in inheritances, though a small but increasing number of Australians are receiving intergenerational wealth transfers from living parents or grandparents, officially called \u201cinter vivo gifts\u201d. Less officially: \u201cthe bank of mum and dad\u201d<\/a>.<\/p>\n In 2002, says University of Melbourne applied economist Dr Melek Cigdem-Bayram, about 5% of the Australian population received an inter vivo gift worth, on average, about $6,500. By 2022 that had increased to 7% of the population, and a gift worth on average $10,300. They\u2019re also becoming more unequal \u2013 about half of cash gifts received are worth $1,000 or less but the top quarter are worth an average of more than $40,000, a potentially life-altering amount of money if invested early, enabling the accumulation of yet more wealth.<\/p>\n It is in inheritances that the real shift will occur, she says, particularly as baby boomers age. For some people an inheritance will simply mean being able to pay off their family home, for others it will mean investments, new properties and funnelling and accumulating more wealth down their family lines. \u201cThat\u2019s when I think we will start to see the full-blown implications on wealth and equality.\u201d<\/p>\n Inheritances significantly increase the likelihood of a person entering home ownership, she says \u2013 even though they are typically received when a person is 50 or 60. \u201cWe\u2019ve seen that inheritance is being used as this sort of vehicle to build wealth and, because [inheritance and gifts] are unequally distributed, there is this fear that they might lead to future further inequalities.\u201d<\/p>\n A former head of the federal Treasury, Dr Ken Henry, says: \u201cThis wealth transfer, I think, is going to be very visible. We\u2019ve already been living through a period in which wealth has become increasingly concentrated.\u201d<\/p>\n Over the course of the 21st century so far, Henry says, those at the top end of the wealth spectrum have managed to accumulate most of the increase in national wealth<\/a>.<\/p>\n The increased unevenness in wealth is particularly pronounced among younger people. A 2024 study <\/a>by the University of New South Wales and the Australian Council of Social Service found that the top 10% of under-35-year-old households hold almost half the wealth of that entire age cohort \u2013 a greater concentration of wealth than in any other age bracket. The growth in wealth for that top 10% was also fastest than in any other age group or income bracket.<\/p>\n It doesn\u2019t just end at housing or acquiring wealth or building wealth \u2026 it can carry over to future generationsMelek Cigdem-Bayram, economist<\/p>\n \u201cSo there\u2019s been a big change in wealth distribution,\u201d says Bruce Bradbury, an associate professor at UNSW\u2019s Social Policy Research Centre, who worked on the 2024 paper. \u201cWealth inequalities increased in Australia and most dramatically for the young.\u201d<\/p>\n While the popular debate has often pitted wealthy baby boomers against impoverished gen z and millennials,<\/a> the growing gap within younger generations, Bradbury says, is \u201can issue people need to pay more attention to\u201d.<\/p>\n \u201cIt\u2019s a bit more complicated than the gaps between young and old.\u201d<\/p>\n \u2018All you needed was to work hard\u2019<\/p>\n When Ken Henry was growing up, all the houses around him were owned by the Housing<\/a> Commission. Fibro houses all around. There were five children in the Henry home and his father, a timber worker, was on the lowest award rate of pay. The Henry house wasn\u2019t social housing, though. \u201cI don\u2019t know why the hell it wasn\u2019t,\u201d Henry says. \u201c[My father] must have just not known how to apply for a Housing Commission house. That\u2019s all I can think of.\u201d<\/p>\n But there were schools nearby. \u201cIt was all about education. And we did believe: you get a decent education, you\u2019ll get ahead. You\u2019ll be able to \u2013 no question \u2013 afford a good house, have a good life. We just took it for granted.\u201d<\/p>\n Henry made use of that education, climbing the ranks of the civil service and, like many of his generation, managed to buy a home. He was able to jump from the working class to the middle class: a promise of social mobility that many Australians have held fast to.<\/p>\n If there were a young Ken Henry today, growing up in a similar community, his prospects for building his own wealth \u2013 his own good life \u2013 might be different. \u201cMuch, much, much different,\u201d Henry says.<\/p>\n In September 2024 the chair of the Productivity Commission, Danielle Wood, declared \u201cgood news for the fair go\u201d<\/a> when research found that Australia was one of the most mobile countries in terms of income in the world \u2013 just behind Switzerland, and doing better than some of the Nordic countries.<\/p>\n That means that in Australia, in general, there is a good chance you may earn more than your parents did.<\/p>\n But the research found that wealth levels \u201cpersisted\u201d between generations within families, particularly among those in the top 10%. Some of this was put down to the fact that wealthier parents can invest more in benefits like their children\u2019s education, which allows them to earn wealth of their own accord. But Wood said: \u201cIncreasingly, too, direct wealth transfers through gifts, \u2018bank of mum and dad\u2019 support for property purchases and inheritances feed into wealth persistence.\u201d<\/p>\n Given the trillions soon to be transferred between generations by the middle of this century (in 2024 the commission gave an estimate of $3.5tn; the economists JBWere have since put it at $5.4tn<\/a>), she said: \u201cIt is likely that wealth persistence in the future will look more pronounced.\u201d<\/p>\n The last mini-generation to have had a good shot at improving their standing in terms of wealth were the xennials \u2013 those in their mid-40s who straddle the X and millennial generations. \u201cThe xennials reached mid-adulthood with greater mobility tailwinds than those who have come after them,\u201d Wood said. \u201cThere\u2019s no guarantee the winds will be as favourable for the next generation.\u201d<\/p>\n In Cigdem-Bayram\u2019s research, the trends are concerning. The wealth gap between middle-wealth and high-wealth households is widening while the gap between middle and poor is getting smaller, she says. \u201cThis \u2018middle\u2019 is starting to hollow out.\u201d<\/p>\n The larger inheritances are, the more compromised equality of opportunity becomesPeter Siminski, microeconomist<\/p>\n The middle is important, she says, because it\u2019s the section of society that is usually highly productive and creates income for the country. It has also been the section where home ownership rates used to be high. Now, Cigdem-Bayram says, an increasing percentage of this middle is becoming reliant on their parents, stalling home ownership or waiting for inheritances or gifts to get a foothold in housing.<\/p>\n \u201cThis dream that I think Australians had had for many years \u2013 what was achievable \u2013 was that everybody was capable of being a homeowner,\u201d she says. \u201cAll you needed was to work hard, and that was doable for everyone. And we\u2019re seeing that that\u2019s not the case any more<\/a>.\u201d<\/p>\n She says this inequality can snowball. \u201cIt doesn\u2019t just end at housing or acquiring wealth or building wealth in this generation but it can carry over to future generations,\u201d she says. \u201cIt limits social mobility for those who are starting off with low levels of wealth.\u201d<\/p>\n Cigdem-Bayram is cautious of painting a bleak picture but says: \u201cIt does change the fabric of society.\u201d<\/p>\n \u2018It\u2019s going to really affect the social compact\u2019<\/p>\n \u201cOne of the major concerns about growing inequality is declining social cohesion, declining trust, as well as the concentration of political influence by the most wealthy and most powerful,\u201d says University of Technology Sydney applied microeconomist Prof Peter Siminski. \u201cThere is a clear link between inequality and all sorts of social cohesion<\/a> and trust issues.\u201d<\/p>\n Siminski researches inequality and intergenerational economic mobility. He cautions against being overly pessimistic about inequality and mobility in Australia today \u2013 it is still fairly equal in comparison with many countries. \u201cBut it\u2019s obvious we\u2019re not headed in the right direction,\u201d he says.<\/p>\n And, he warns: \u201cThe larger inheritances are, the more compromised equality of opportunity becomes.\u201d<\/p>\n Are we really a community that seeks to ensure that everybody has the ability to access a good life?Ken Henry, former Treasury chief<\/p>\n Ken Henry is long on the record for saying that the idea of an egalitarian society in Australia is a myth. \u201cBut,\u201d he says, \u201cit\u2019s incredibly important that we believe that we are. Or, at least, that we value a fair go.\u201d<\/p>\n The intergenerational wealth transfer, he says, will challenge both that belief in ourselves but also social cohesion more broadly: \u201cIt\u2019s going to really test the social compact in Australia.<\/p>\n \u201cThose who are not beneficiaries of the intergenerational wealth transfer stand to be somewhat disaffected by the fact that it\u2019s getting harder \u2013 or it seems to be getting harder \u2013 to accumulate wealth from your own effort.\u201d<\/p>\n The impact of that inequality and disaffection, Henry says, could be significant. On one hand, economies rely on large middle classes building wealth because that\u2019s what generates social income. On the other, it has been linked to an erosion of loyalty to democracy. \u201cSo what it means in the first instance, I think, is that people lose faith or lose confidence in government. They lose confidence in the democratic system.\u201d<\/p>\n We have seen this play out in other parts of the world, Henry says: leaders with autocratic tendencies being voted into power by disaffected electorates. Growing inequality can increase disaffection with democratic institutions. \u201cAnd if [people] lose that confidence, if they lose that faith, then what tends to happen is that the democracies throw up people who really are not interested in the welfare of the majority of citizens \u2013 and things just get worse and worse.<\/p>\n \u201cWe have seen that these things can end up in very ugly places.\u201d<\/p>\n Henry does not want to overdramatise. There is a chance, he says, that \u201cpeople wake up to themselves\u201d and the pendulum swings back away from increasing inequality.<\/p>\n \u201cI would like to see us focusing with much greater energy on that question of what it means to provide a fair go to all. Are we really a community that seeks to ensure that everybody has the ability to access a good life, a life that we would all agree they have reason to value?<\/p>\n \u201cI think it\u2019s an incredibly important challenge.\u201d<\/p>\n Kath Day-Knight would be about 70 now. The house in the show \u2013 that instantly recognisable proxy for the accessible, comfortable, nothing-flash Australian every-house \u2013 sold for $190,000 in 1997, five years before Kath and Kim went to air. It sold for nearly $1.5m<\/a> in 2016, nine years after the show wrapped. Kath was a stay-at-home mother. Her house now, a decade on, would be out of reach for a pair of highly educated, professional first home buyers working full-time.<\/p>\n Unless, of course, they got some help.<\/p>\n","protected":false},"excerpt":{"rendered":"Kim Day has got word that her mother-in-law is dying. At last. It\u2019s good news for one half…\n","protected":false},"author":2,"featured_media":287067,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[138,219,111,139,69],"class_list":{"0":"post-287066","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-economy","10":"tag-new-zealand","11":"tag-newzealand","12":"tag-nz"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/287066","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=287066"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/287066\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/287067"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=287066"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=287066"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=287066"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"$5.4](\"https:\/\/www.newsbeep.com\/nz\/wp-content\/uploads\/2026\/02\/1919.jpg\")
$5.4 trillion will soon be inherited in Australia. What does this mean for equality? \u2013 video<\/p>\n