Australia’s economic trajectory


An article has been doing the rounds – House of Cards – by Matt Burnie and Craig Tindale, that we highly commend. Rarely do articles array so much data in devastating order. There must be over 100 links highlighting the risky nature of our economic miracle from one industry after the other. Whilst the authors haven’t outlined the necessary solutions, the material gives a fresh perspective to a global economic system hellbent on short-term speculation. One thing is certain, Australia’s reliance on rent-seeking as a policy directive must end. Be prepared with a cup of tea as this is an hour long journey of economic intrigue.

 

I recently watched the federal treasurer, Scott Morrison, proudly proclaim that Australia was in “surprisingly good shape”. Indeed, Australia has just snatched the world record from the Netherlands, achieving its 104th quarter of growth without a recession, making this achievement the longest streak for any OECD country since 1970.

Australian GDP growth has been trending down for over forty years
Source:
Trading Economics, ABS

I was pretty shocked at the complacency, because after twenty six years of economic expansion, the country has very little to show for it.

For over a quarter of a century our economy mostly grew because of dumb luck. Luck because our country is relatively large and abundant in natural resources, resources that have been in huge demand from a close neighbour.

That neighbour is China.

Out of all OECD nations, Australia is the most dependent on China by a huge margin, according to the IMF. Over one third of all merchandise exports from this country go to China- where ‘merchandise exports’ includes all physical products, including the things we dig out of the ground.

Source: Austrade, IMF Director of Trade Statistics

Outside of the OECD, Australia ranks just after the Democratic Republic of the Congo, Gambia and the Lao People’s Democratic Republic and just before the Central African Republic, Iran and Liberia. Does anything sound a bit funny about that?

Source: Austrade, IMF Director of Trade Statistics

As a whole, the Australian economy has grown through a property bubble inflating on top of a mining bubble, built on top of a commodities bubble, driven by a China bubble.

Unfortunately for Australia, that “lucky” free ride is just about to end.

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5 Comments

  1. Peter Malane23-11-2017

    Wow Karl that was a big read! But Yes thanks very informative. BTW, thanks for the Henry George dinner another great night.

  2. Jean06-12-2017

    good analysis with plenty of references. unfortunately, the most important events have been omitted – effects of climate change, effects of waste/pollution, and effects of high immigration, high birthrate and overpopulation upon australia. these effects being social, environmental, economic and, of course, emotional.

  3. Jean06-12-2017

    hey – where is my comment?

  4. Karl Fitzgerald
    Karl Fitzgerald07-12-2017

    Hi Jean,
    sorry we’ve had some webhosting issues – they’ve been under attack. I couldn’t access the backend over the last few days to approve the comment. Whilst not a deliberate environmental article, they did hint at enviro issues re climate and Adani, immigration is also referenced via Llewellyn-Smith. Australia’s birthrate is currently at 1.8, down from 1.88. This is below the necessary 2.1 needed just to sustain current levels. The best source of environmental data is the ABS Australian Environmental Economic Accounts, which highlights monetary and non-monetary costs to the continent. Unsurprisingly, a significant indicator of waste is housing deconstruction. All that concrete going to landfill.

  5. Jean08-12-2017

    hi karl. thanks for your reply. there is much misunderstanding about australia’s fertility rate and our(very high) birth rate.

    australia’s ‘total fertility rate’ (the average number of children per woman) fell below 2.1 in 1975, after the popularisation of the contraceptive pill from the 1960s. this rate of 2.1 is considered to be the ‘replacement rate’, when children are just numerous enough to replace the parents’ generation, allowing for some early deaths. however, natural increase continues for decades after achieving below-replacement fertility, because today’s deaths are mostly among the great-grandparents of today’s babies, and the great-grandparents are less numerous because they had larger families. this continuation of growth is called ‘demographic momentum’.

    our high birthrate and high immigration numbers will see our population exceed 40 million by 2050 and 100 million before 2100. ie will will need a new city the size of canberra every year!

    this is a great website for the facts and figures……http://population.org.au/jean

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