Australians are the Richest People in the World? Let’s find out.
Australia’s residents are the wealthiest in the world. As of 2019, Australia has a high income of 411,000 USD, according to the average net worth of an Australian adult. Furthermore, the median Australian net worth is around 191,000 USD, implying that wealth in Australia is spread evenly. On top of all that aside Australia has never encountered a recession and has avoided the global financial crisis of 2008. So, what is the story behind how Australia has always been a highly developed country? We’ll look at three major areas: mining, housing, and the Royal Commission.
The mining industry in Australia is geographically lavished with vast amounts of iron ore, coal, natural gas, and other valuable resources. Making them one of the richest resource countries; additionally, Australia’s geographic location made them a desirable trader to Asian countries such as India, Japan, South Korea, and China. This factor is a crucial export driver in the Australian economy. Australia has opportunities to earn a high income just for unskilled labour, which can be paid as much as 150,000 USD, and that’s before taking into consideration the skilled workers like engineers, who are also paid very generously. In 2018, Australia exported over 270 billion USD worth of raw materials, with a high amount of demand from other countries. However, mining employs only about 3% of Australia’s workforce, and it is a minor contributor to the country’s economy. Mining accounts for only about 7% of Australia’s GDP, far less than larger industries such as construction, finance, and education. As a result, the mining industry cannot be explain for Australia’s wealth.
So the next topic we’ll look at is housing. Australia is a very safe and clean country with a great neighbourhood, making it appealing to wealthy migrants. The Australian government even has a very liberal immigration policy for migrants with skills such as medicine or engineering. This is because when migrants are already wealthy and skilled, they will come to the country and boost the economy. As a result, the demand for housing rises. Originally, the Australian government carried out a policy known as negative gearing, which makes investing in real estate very tax efficient, suggesting that investors would rather put their money in rental properties rather than the stock market, making Australia’s market one of the most expensive in the world. This created a problem for a young generation that had been priced out of the property market due to extremely high prices. As a result, Australia’s government established the superannuation gap. It is a law that requires employees to contribute a certain percentage of their earnings to a retirement savings account, which is then invested in the market. It applies to all Australian workers with very few exceptions. This contribution is made before taxes, so most Australians are satisfied with this arrangement because it is tax-efficient and allows them to save for retirement.
The Royal Commission comes next. The trillions of dollars invested by Australians in their superannuation funds attract certain illegal company behaviours. The entire superannuation industry has been subject to a Royal Commission, which is the Commonwealth equivalent of a congressional investigation into whether or not they overcharged their customers for fees and services associated with their superannuation funds. Because most Australians don’t pay attention to their superannuation accounts until they reach a certain age, these charges went largely unnoticed, making these companies extremely wealthy. Meanwhile, another disadvantage is that these super accounts are not accessible to Australians until they are 60 years old, despite the fact that a middle-aged Australian may have a net worth of a few million dollars on paper. Despite all of their concerns, most of this may be inaccessible to them in order to improve their quality of life in any way until they reach the age of 60.
Lastly, Australia deserves the title of “advantageous country.” Australians are the world’s wealthiest people because of excellent policy, which has driven them to do what every personal finance book has ever told people to do. Their charming country continues to draw visitors and businesses from all over the world, boosting the local economy. Making Australians one of the world’s wealthiest residents.
This article is a part of the class “751309 Macro Economic 2”supervised by Asst. Prof. Napon Hongsakulvasu
Faculty of Economics, Chiang Mai University
This article was written by Apichaya Poolpoka 651615063
Reference
Explained, E. (2019b, July 3). Australians are the richest people in the world?. YouTube. https://www.youtube.com/watch?v=INQQdY0SzW4