In Australia the top 20 percent of households control nearly two-thirds of the nation’s wealth, while the bottom 20 percent hold a statistically insignificant 1 percent. The “comfortable Australian middle class” is a statistical ghost; most are merely “pre-poor”, clinging to a mortgage while the wealthy pull away.

Australia is rapidly turning into a plutonomy, an economy where economic growth is powered by and largely consumed by a wealthy minority.

We are witnessing a structural decoupling of democracy and the economy. The majority of people work to sustain the profiteering of corporate giants and the asset speculation of the rentier class.

Australia’s social contract is fracturing. The top 20 percent of households own 92 times as much wealth as the bottom 20 percent. In dollar terms, the average wealth of a household in the highest 20 percent is $3.25 million, compared to just $36,000 for a household in the lowest 20 percent.

It is nonsense to think of this as a simple “wealth gap”. It is an extreme chasm that creates a structural divide between people who live in entirely different economic realities.

A household with $36,000 in assets cannot survive a car breakdown, a dental emergency, or three weeks of unemployment. They are not just precarious; they are permanently trapped, forever a single bad day away from destitution. Meanwhile, their rent payments are siphoned upward to insulate the landlords from the very inflation they help create.

When one fifth of the population controls nearly two thirds of all national wealth, we don’t have a real democracy, we have an economic oligarchy. Political power concentrates towards money.

The bottom 20 percent are effectively non-participants in the Australian economy beyond basic survival. They are excluded from the social contract of asset ownership. Their participation in democracy is effectively limited to casting a vote once every three or four years, and only if they have the luck of living in a marginal electorate do their needs get considered.

The wealth inequality data also shows that the middle class in Australia is little more than a myth these days. The middle wealth-owners have around $565k on average. The top holds 6x this amount. Even the middle class is closer to poverty (they are “pre-poor”) than they are to the true wealth-owning economic elites.

Wealth inequality in Australia is significantly more severe than income inequality. While the highest 20 percent of income earners receive approximately six times the disposable income of the lowest 20 percent, the wealth disparity between these same groups is over 90 times.

It is impossible to work and earn wealth at such an extreme level. It can only be achieved through accumulation and inheritance.

The axiom that capital accumulation outpaces the rewards of work is proven, again.

For example, the highest 20 percent wealth group owns over 80 percent of all wealth in investment properties and shares, and over 70 percent of all superannuation assets.

The wealth transfer inherent in the ownership of investment properties demonstrates that the housing crisis is manufactured. The majority of the population pays rent to the top wealth owners (or inflated mortgages to the bank) — this serves to siphon wealth upwards and also further inflates the value of those assets for the ultra-rich.

The property millionaires aren’t capitalists or entrepreneurs and they aren’t the “mum and dad investors” we get sold on the nightly news — they are a class of modern-day feudal lords who extract wages from working people through the threat of homelessness.

This wealth inequality has been worsening since 2004 (and this is just the ACOSS data, the real slow-moving crisis started earlier). Over the last two decades, the wealth of the richest 200 households in Australia has risen from 8 percent to 25 percent of GDP.

This isn’t an natural acceleration of inequality. Laws were written to make it happen — Hawke and Keating started the deregulation and it was supercharged by Howard. Tax policies like the capital gains tax discount, privatisation, the dismantling of the welfare state, and attacks on unions like Workchoices.

Every time a worker pays full tax on their wages, they are subsidising a landlord’s tax-free windfall. The 50 percent capital gains discount is a state-sanctioned transfer of wealth from the worker to the speculator, where half of property sales profits go untaxed.

The track of wealth inequality maps perfectly over the implementation of aggressive neoliberal policies that privilege rentier capitalism over production.

This widening gap is because laws were written to favour asset holders. The ABS shows that 90 percent of the changes in net worth in Australia between 1990 and 2023 came from capital gains, rather than savings from wages.

The vast majority of the wealth owned by the top economic elites is not earned by them through their labour, production or “savings”. In 2023, dwelling prices rose nearly 5 per cent, far outstripping wage growth. This is parasitic asset inflation and rentierism, subsidised by working people who pay tax for every hour they work while ultra-landlords and billionaire shareholders get rich while doing nothing.

The facts show what intuitively most people know. Our economic system, our tax system, are broken. The myth of homeownership, perpetuated by shows like The Block, is busted for Millennials and Gen Z, with most of the population now prevented from ever joining the asset ownership class.

By taxing wages heavily while offering discounts on capital gains, we allow the accelerated concentration of wealth towards the top.

The austerity and neoliberalism of the Howard era created a feedback loop where money begets money, completely divorced from income derived from work. The attacks on unions made it even worse, leaving working people disorganised and unable to exert the counter-pressure necessary to reverse these regressive tax changes. The financial precarity of working people and “petit bourgeoisie” (small business owners, tradies) has led to a politics of “moral disapproval” directed downward at welfare recipients or immigrants, rather than upward at the corporate and new feudal elite extracting wealth.

To stop this slide into permanent US-style plutocracy, we must look beyond tweaking income tax brackets and tax wealth. The focus on income and income taxes distracts from the real power and excessive accumulation.

Without the intervention of a wealth tax, the “fair go” will remain just a nostalgic and jingoistic slogan for a society defined by inherited privilege.