The Australian middle class is shrinking, and the country is becoming an inherited wealth nation. This is according to a recent KPMG analysis, which reveals a stark contrast in wealth distribution among households. While the average household wealth has surged by 24%, from $1.26 million in 2019/20 to $1.56 million in 2024/25, the median household wealth has barely shifted, remaining at $700,000. This discrepancy highlights the growing wealth inequality in Australia. The data shows that the number of households with net wealth of between $300,000 and $900,000 has decreased from 34% to less than 28% in the last decade. This middle-wealth bracket, once topped up by first home buyers, is now struggling due to worsening housing affordability. As a result, the wealth of one's parents is becoming a more significant factor in someone's ability to generate wealth, with some young people believing they may only be able to buy a property once they receive their inheritance. This trend is concerning, as it suggests a widening wealth gap and a potential loss of economic mobility for younger generations. The analysis comes as Australia's wealth gap is under renewed scrutiny, with calls for reform, including a wealth tax, to reduce inequality and fund essential services. The Australian government is facing pressure to address this issue, especially with the upcoming federal budget, where "intergenerational fairness" is expected to be a key theme. The Treasurer, Jim Chalmers, has flagged changes to the capital gains tax discount and negative gearing, indicating a potential shift towards a more equitable tax system. However, the challenge lies in balancing the needs of older Australians, who have accumulated significant wealth through generous tax arrangements, with the concerns of younger Australians, who are struggling to keep up with rising asset values. The shrinking middle class and the rise of inherited wealth in Australia are not just economic issues but also reflect a deeper societal concern. As the country grapples with these changes, it is crucial to address the underlying causes and implement policies that promote a more inclusive and sustainable wealth distribution.
