A fair swag of Novocastrian households are millionaires. Their wealth comes from two sources, owning a house and building lifelong savings in superannuation accounts.
The median house in Newcastle is estimated by valuers Core Logic to be worth about $750,000. The average superannuation balance for a typical Newcastle couple is just over $300,000. Put the two together, the house and the super, and there's a million dollars right there.
Sometimes it's easy to forget how wealthy our society is, even away from Sydney. A recent report by the investment bank Credit Suisse lists Australia number one in the world for wealth, at $320,000 for the median adult Aussie. On top, the growth in wealth for a typical Australian during 2020, at an astonishing 12 per cent, was faster than anywhere else in the world. The driver, of course, has been rising house prices.
For Newcastle, Core Logic reports house price growth averaging 5.9 per cent annually over the past five years. This equates to a compound rise of 33 per cent since 2015. If this rate of increase continues, the value of a Newcastle house in 2015 will have doubled by 2027.
For superannuation savings, your 2015 balance was 50 per cent higher by the end of 2020 even without ongoing contributions, so long as you aren't in a dud fund. If the average rate of return from 2015 to 2020 - a whopping 8.5 per cent annually - continues then your 2015 balance will have doubled by 2024. And all this wealth growth takes place at near-zero inflation rates.
Economists say when there is widespread growth in wealth, then there is a "wealth effect". Financial security means people become more generous. They renovate their home - and we are seeing record levels of renovation in the Hunter, and nationally, now. The wealth effect sees people buying collectibles, often to show off their amplified circumstances, like handbags, fine wine and classic cars.
The wealth effect also benefits the children of wealthier households, typically via access to the bank of mum and dad to help with a car purchase or a house deposit.
But writing about prosperity seems perverse right now, no? Good health, physical safety, the support of family and neighbours, are surely higher priorities.
And how widespread is this surge in prosperity?
ACOSS, the social justice lobby group, says while the average wealth of the top 20 per cent of Australian households was a jaw-dropping $3,255,000 in 2017-18, the average wealth of the lowest 20 per cent of households was a mere $36,000. There's no wealth effect in this group for its 2 million members, sparse home ownership, barely any savings, no bank of mum and dad for the kids to raid for a car or home deposit.
Sadly, we don't need new research to recite the characteristics of Australia's bottom 20 per cent. The educational achievement of adult household members is not at the level needed for 21st century jobs. Education participation of children and young adults is below par. Too many teenagers disappear, not learning, not earning.
Moreover, the health gap between rich and poor is widening.
In turn, health outcomes in these households are worrying. Writing in TheConversation, University of Melbourne academics Tim Adair and Alan Lopez say that people living in the 20 per cent most socio-economically disadvantaged areas in Australia are twice as likely to die prematurely than those in the highest 20 per cent.
Moreover, the health gap between rich and poor is widening. The reason, say the authors, is that death rates from cardiovascular conditions such as heart disease and stroke aren't falling among poor people, even though these rates have been falling consistently among better-off Australians. Poor diet, high rates of smoking and alcohol abuse are behind the bad health outcomes.
Limited access to health care compounds the problem, say Adair and Lopez.
There's no wealth effect for these households. No fair go either.
Sure, Australia's poorest 20 per cent of households are protected by the nation's welfare system. But for most households this protection is the sum total of their income and their only access to services.
There is no income, no wealth, beyond this most basic level of support.
And while ever this group struggles, the presence of so much concentrated wealth in Australia should embarrass us as a nation.
A wealth effect in a compassionate nation would look very different.
Phillip O'Neill is professor of economic geography at Western Sydney University.
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