Strip out immigration – 6 quarters of negative per capita GDP – and Australia is in recession but it’s not all bad news for Anthony Albanese and Jim Chalmers. The world is in low-growth mode. Alan Austin checks the performance.
In her public comments on yesterday’s national accounts for the June quarter, Katherine Keenan said: “The Australian economy grew for the eleventh consecutive quarter, although growth slowed over the 2023-24 financial year.”
What the head of national accounts at the Australian Bureau of Statistics (ABS) could have added, but may not have known, was that only three economies among the 38 wealthy members of the OECD can boast that record – Australia, Turkey and Belgium.
The numbers announced yesterday look grim on their own. The quarterly increase in GDP was 0.22 per cent and the annual rise just 1.49 per cent, both low compared with Australia’s history of strong growth since the 1980s.
Global comparisons, however, confirm this is low growth era. Of the 32 OECD members to have reported June quarter growth, eight reported zero or negative growth. These include normally robust economies Germany, Sweden, Austria and South Korea. This is the second such quarter for Sweden and Estonia, which are now in recession.
Another 21 countries, including Australia, recorded positive quarterly growth below one per cent. These include powerhouses Japan, Switzerland, Denmark, the USA and the United Kingdom. Sluggish GDP growth is now normal, even in well-managed economies. The entire world is impacted by the war in Ukraine, the slowdown in China, refugee movements, global inflation and increased focus on non-economic growth.
Annual GDP growth low worldwide
Of the 32 OECD members which have reported annual GDP growth for June, the average was just 1.19 per cent, a low historically associated only with recoveries from recessions. See chart below.
Australia’s current ranking is 14th among those 32 developed economies. That’s much lower than top four, where Australia was placed during the Rudd/Gillard years, but a vast improvement on 28th where Australia languished through most of the Morrison period.
For more than a year now Treasurer Jim Chalmers has managed the only economy in the world with top credit ratings, inflation below four per cent and positive economic growth over the last six quarters.
With the latest UBS wealth data, Australia is also the only economy to have delivered consecutive surpluses, reduced net debt to GDP two years running and maintained average wealth per person above A$800,000.
Looking after the workers
Criticisms that the Albanese Government is not redressing the inequalities are answered to some extent by the file in the national accounts showing the percentage of the nation’s total income going to workers’ wages. (ABS file 5206 table 7) See chart below.
The proportion going to employees increased through Abbott and early Turnbull period reaching a creditable 55.2 per cent in March 2016. Soon after Scott Morrison became treasurer, this dipped substantially and then continued to decline to an all-time low of 49.0 per cent in June 2022, the quarter when Labor replaced the Coalition.
Since then, the share has risen steadily to reach a four-year high of 52.6 per cent in yesterday’s figures.
Mirroring that trajectory, shown in red on the chart, below, is the percentage going to corporate profits, which is shown in the green line. This declined under Abbott, increased under Turnbull and Morrison, and is now declining again.
Many households managing well
Treasurer Jim Chalmers has himself spoken of the cost of living crisis but not all households are affected, if the national accounts are a guide. It is however the dominant narrative being spruiked by the Opposition and mainstream media.
The national accounts show household spending remains strong, despite a slight reduction in the June quarter. See graph below.
More important than the June quarter household expenditure was the full year to June, which was another record high. In fact since this ABS series began in 1959, the only year which wasn’t a fresh record was 2019-20 – the Covid downturn.
Of course some families are still doing it tough, as treasurer Chalmers readily admits. But the data indicates the proportion of the population in that parlous situation is currently lower than at any time in history.
This is bolstered by a long list of published outcomes, including real wage rises, retail sales at an all-time high to GDP, the proportion of retail sales spent on luxuries, jobs numbers and percentages, underemployment and underutilisation rates, overseas flights, the number of new home loans, the value of new home loans, moderate demand for emergency accommodation, national debt hotline counselling figures and multiple other datasets.
Productivity remains the most troubling outcome in the national accounts for June, as has been the reality for eight years now. Moves are currently in place to fix this. We shall see if they are effective in December. And we shall see then if the economy expands for a twelfth consecutive quarter.
Editor’s Note: It is interesting that (chart 1) Norway is the best performer. Unlike Australia, Norway has captured the wealth from its fossil fuel income rather than allowing multinational companies to export it – a terrific shield against global headwinds. The challenge for government now is to manage immigration, which has masked our economic growth figures coming out of Covid.
Alan Austin is a freelance journalist with interests in news media, religious affairs and economic and social issues.