RDP 8606: The Nation's Wealth – Some New Calculations for Australia 1. Introduction

This paper has two related purposes. The first is to bring together and review a number of earlier studies which have attempted to estimate the value of Australia's privately held wealth stock. The second is to present new estimates, based partly on these earlier studies, which value all major components of the nation's private wealth at their market value, or a close approximation. These calculations use new data for some components of wealth, some of which were not available to earlier studies. The result is a more comprehensive market value of aggregate Australian wealth. The estimates suggest that previous studies have substantially undervalued Australia's private wealth.

In recent times, a number of research projects by both academics and government officials have estimated various components of Australia's wealth.[1] While in combination these studies provide careful assessments of most of the items in the nation's private wealth stock, each on its own has serious deficiencies and reported estimates differ widely. For example, Norton et al (1982) estimate Australia's total private wealth at $230.5 billion for 1981, while Williams (1983) reports an aggregate figure of $360.5 billion for the same year.[2] Since these are widely regarded as the two most authoritative Australian studies in the field, the discrepancy between their results would alone suggest that a re-examination of the issue may be of use. In addition, however, new official and other statistics have recently become available which permit improved aggregate wealth estimates to be generated, and these reinforce the benefit of further calculations.

Aggregate wealth estimates have at least two distinct applications. First, personal wealth is frequently an argument in the consumption function of macroeconometric models, and a series reflecting this variable is required for the specification of such models. Secondly, wealth distribution estimates, however calculated, are likely to miss some personal wealth, and an informed assessment of the distribution requires some sense of how much wealth it omits. While estimates of an economy's aggregate wealth have other uses as well, it is these two applications which have motivated the present study.[3]

The paper is divided into two substantive sections. Section 2 outlines alternative approaches to the estimation of aggregate wealth, deals with some definitional issues, and discusses earlier Australian estimates. In Section 3, I present and interpret my own calculations, and compare them with earlier results. Section 4 offers some concluding comments.


See, for example, Gunton (1975), Raskall (1977), Helliwell and Boxall (1978), and Williams (1983). [1]

Norton et al, who extend the pioneering work of Helliwell and Boxall (1978), exclude the value of land in this estimate; Williams excludes the value of unincorporated capital stock. The studies are reviewed in more detail below. [2]

For example, it is sometimes claimed that aggregate wealth figures provide a benchmark against which to measure the burden of a nation's debt. [3]