Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 216

Where do our wealth and jobs come from?

The wealth of Australia in the last official estimate by the ABS for FY2016 was $14.4 trillion, and net of foreign liabilities (equity and debt) was just over $11 trillion. This net wealth is split 83% household and 17% government.

Residential land and dwellings dominate wealth

It is our developed resources of land used for dwellings and commercial buildings, and the buildings and infrastructure on that land, that dominate with almost two-thirds of wealth. Interestingly, our natural resources of mining and timber account for a small 7% of the total wealth. Equipment and inventories add another 9% and intellectual property 2%. The balance of 15% is in the form of financial assets. The exhibits below tease out the composition.

Australian wealth

Australian wealth

For households, average net worth sat at just under $1 million in FY2016, and will average $1 million by the end of 2017 calendar year. Thanks mainly to the rapid growth in superannuation, households are on the cusp of having financial assets at over half this average net worth, which is already a reality in the USA. Superannuation has accelerated the displacement of hard assets such as land, buildings, equipment and household durables such as vehicles, appliances and furniture.

The new wealth created every year is termed our gross domestic product (GDP), and it reached $1.7 trillion in calendar 2016, although we consume most of it in the form of consumable goods and services. We export around a fifth of it to balance our imports and invest around a quarter of the GDP in dwellings, buildings, equipment and intellectual property. Depreciation eats into such investment, new and old, but asset appreciation also takes place via land values and the growing value of businesses.

The exhibit below shows this new wealth creation in the year to March 2017.

Touring the land beats the land itself

Gone are the days when most of our wealth was created on the land. Agriculture and Mining now account for less than 10% of our wealth each year. The value-added via processing is rightly credited to Manufacturing industry.

Ironically, more wealth is created these days by touring on the land (tourism by Australians and inbound tourists) at nearly $100 billion compared with Agriculture at a little over $70 billion.

Our secondary (industrial age) industries are a shadow of their former dominance. It has fallen from about 40% of GDP in the 1960s to 18% now. It is the quaternary (fourth) and quinary (fifth) service industries that are creating most of the wealth in our current Infotronics Age (1965-2040s). Health is now the nation’s largest industry when the health services, medical insurance, pharmaceutical manufacturing and pharmacists are taken into account.

Only manufacturing - under blow-torch pressure from mass-producers such as China, and a lack of uniqueness or economies-of-scale - has fallen in net new wealth creation. It is the service industries creating the vast bulk of new wealth.

How do the changes translate into jobs?

This is even more the case when it comes to jobs, as seen below. The goods sector (via only Construction) created 1 in 8 of the new jobs, but the goods sectors accounted for nearly all the jobs lost over the past 5 years.

We are still creating new wealth, our net worth continues to grow and will pass $1 million per household as we enter 2018, and we are creating six times more jobs than we are losing over a 5-year period.

For all of the political shambles we put up with - worse in most other countries - our business sector continues to create this new wealth and jobs. Let’s thank the business sector for that.

 

Phil Ruthven is Founder of IBISWorld and is recognised as one of Australia’s foremost business strategists and futurists.

2 Comments
David Hurburgh
September 03, 2017

Come on Phil, you of all people should know that Primary Industries have job multipliers in excess of 3 whereas the Service Sector ( eg Baristas ) it would be less than 0.5.

 

Leave a Comment:

RELATED ARTICLES

Our finances should enable and not dictate our lives

Still, very much, the Lucky Country

banner

Most viewed in recent weeks

Are LICs licked?

LICs are continuing to struggle with large discounts and frustrated investors are wondering whether it’s worth holding onto them. This explains why the next 6-12 months will be make or break for many LICs.

Retirement income expectations hit new highs

Younger Australians think they’ll need $100k a year in retirement - nearly double what current retirees spend. Expectations are rising fast, but are they realistic or just another case of lifestyle inflation?

Welcome to Firstlinks Edition 627 with weekend update

This week, I got the news that my mother has dementia. It came shortly after my father received the same diagnosis. This is a meditation on getting old and my regrets in not getting my parents’ affairs in order sooner.

  • 4 September 2025

5 charts every retiree must see…

Retirement can be daunting for Australians facing financial uncertainty. Understand your goals, longevity challenges, inflation impacts, market risks, and components of retirement income with these crucial charts.

Why super returns may be heading lower

Five mega trends point to risks of a more inflation prone and lower growth environment. This, along with rich market valuations, should constrain medium term superannuation returns to around 5% per annum.

The hidden property empire of Australia’s politicians

With rising home prices and falling affordability, political leaders preach reform. But asset disclosures show many are heavily invested in property - raising doubts about whose interests housing policy really protects.

Latest Updates

Investment strategies

Why I dislike dividend stocks

If you need income then buying dividend stocks makes perfect sense. But if you don’t then it makes little sense because it’s likely to limit building real wealth. Here’s what you should do instead.

Superannuation

Meg on SMSFs: Indexation of Division 296 tax isn't enough

Labor is reviewing the $3 million super tax's most contentious aspects: lack of indexation and the tax on unrealised gains. Those fighting for change shouldn’t just settle for indexation of the threshold.

Shares

Will ASX dividends rise over the next 12 months?

Market forecasts for ASX dividend yields are at a 30-year low amid fears about the economy and the capacity for banks and resource companies to pay higher dividends. This pessimism seems overdone.

Shares

Expensive market valuations may make sense

World share markets seem toppy at first glance, though digging deeper reveals important nuances. While the top 2% of stocks are pricey, they're also growing faster, and the remaining 98% are inexpensive versus history.

Fixed interest

The end of the strong US dollar cycle

The US dollar’s overvaluation, weaker fundamentals, and crowded positioning point to further downside. Diversifying into non-US equities and emerging market debt may offer opportunities for global investors.

Investment strategies

Today’s case for floating rate notes

Market volatility and uncertainty in 2025 prompt the need for a diversified portfolio. Floating Rate Notes offer stability, income, and protection against interest rate risks, making them a valuable investment option.

Strategy

Breaking down recent footy finals by the numbers

In a first, 2025 saw AFL and NRL minor premiers both go out in straight sets. AFL data suggests the pre-finals bye is weakening the stranglehold of top-4 sides more than ever before.

Sponsors

Alliances

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.