Wealth For Toil

AUSTRALIA is a rich country - fulfilling the promise of our national anthem, "wealth for toil". The World Bank places Australia in the top tier of high-income countries and ranks us 24th in the world, based on gross domestic income per head.

Last year, real disposable income per household increased by 6% , around the fastest rate in nearly two decades, according to the Reserve Bank. Last week, CommSec estimated that the average Australian now has wealth equivalent to about $250,000, up $21,700 over the past year.

But this year, with the sharemarket in tatters and the property market slowing to a halt, many of us now feel somewhat less wealthy than we did.

The sharemarket's tumble in value has eroded the wealth base of the nation, including its $1.4 trillion in funds under management.

And it's not just super.

The ASX's most recent share ownership study showed that 6 million Australians, or 38% of the population, were direct investors in the sharemarket.

Meanwhile, the spectre of household debt continues to eat away at our collective wealth. Although our net worth is higher, our debt-to-assets ratio - the ratio of total debts to total household assets - has expanded from 8.8% in 1985 to more than 18% in March.

It is, of course, unwise to generalise. Some of us are doing very well. According to Merrill Lynch's most recent World Wealth Report, there were 172,000 high net-worth individuals in Australia last year, up more than 7.1% on the previous year. A high net-worth individual has more than $US1 million in financial holdings, excluding their primary residence.

But that kind of wealth is very concentrated - those 172,000 ultra-rich individuals equate to less than 1% of Australia's population. And, according to the latest census data, just 6% of Australian family households that reported their income were in the highest bracket of $3000 or more a week, or at least $156,000 a year.

The biggest proportion of families were in the $1000 to $1199 bracket. Slightly more than 11.5% of family households, or 603,395, fell in this bracket, which works out to between $52,000 and $62,348 a year.

The Tax Office also keeps statistics that provide a snapshot of income and wealth distribution in Australia.

For 2005-06, it recorded 19 postcodes around the country where mean taxable income was $30,000 a year or less. The lowest was NSW's postcode of 2308, which includes part of Newcastle, where the average taxable income was $19,444.

There were 15 postcodes with a mean taxable income more than $100,000, most of them around Sydney Harbour.

Victoria's 3944, the postcode for Portsea, had the highest average taxable income in the country, at $157,289.

Where we spend our money

Australia is, it seems, in the middle of a housing affordability crisis, and the rental market is tighter than ever. These factors, and successive interest rate rises, are only adding to housing-related costs of Australian households - costs that account for the biggest proportion of the average household budget, as ABS figures show.

And with petrol prices at record levels, the cost of transport is going up, too.

CAKE DECORATION BY ANGELA BELT.

A tower of wealth.

Australia was once touted as a classless society. Whether that was ever true in the past, it is certainly not true now. A small proportion of households earn many times more than the average household; and although, on average, we've all been gaining wealth, some are getting richer at a much faster pace.

This graph shows the number of households in each income bracket.

SOURCE: ABS 2005-06

$1.1 trillion Australia's total superannuation assets in the 12 months to March 31

There are 25,681 ATMs and 597,063 EPTPOS terminals in Australia Household gross income rises $70bn a year

$80bn was paid in interest by households in 2007. t is expected to be $105bn in 2008-09

7.3m Australians own shares, 6m own direct shares Australians lost $980m to personal fraud last year

Credit card debt $44bn

SOURCES: AUSTRAL A PRU E T AL REGULA T O AUTHOR T (APRA); RBA; WESTPAC; ASX; ABS