Last week, Treasurer Jim Chalmers released Australia’s first national “wellbeing framework” that comprises around 50 indicators showing how Australia’s living standards are supposedly improving:
As shown above, 20 indicators have supposedly improved whereas only 12 have deteriorated.
Thus, the framework paints a rosy picture of the economy at a time when Australians’ living standards are at an all-time low.
After adjusting for inflation, real wages have fallen to March 2009 levels:
That’s 14 years of wage rises gone, with further cuts inevitable as inflation outpaces wage growth.
Australians are also dealing with the greatest rental crisis in living memory, as well as an energy price shock that has caused electricity and gas rates to spike by roughly 25% down the east coast.
The Australian economy’s dirty secret:
The population of Australia increased by a record 500,400 in the calendar year 2022, driven by record net overseas migration (NOM) of 387,000:
According to the May federal budget, Australia’s population will grow by an unprecedented 2.18 million people over the next five years, equal to the population of Perth.
This projected population growth will be driven by a record 1.5 million NOM over the same five-year period, equivalent to the population of Adelaide.
This is the dirty little secret underlying the Australian economy.
Other countries have relied on ‘money printing’ or quantitative easing to drive economic growth.
Instead, Australia’s federal government relies on ‘quantitative peopling’, or rapidly increasing the population through mass immigration, to drive our economy.
More people in the economy spending and consuming is good for aggregate economic growth.
Businesses benefit from having more customers to sell to as well as a broader pool of workers to choose from: it’s a win-win situation from their perspective.
The impact of mass immigration on ordinary Australians’ living standards is less favourable, because they must compete harder for housing and jobs with new immigrants, while infrastructure, services, and the natural environment are overburdened.
Meanwhile, if it weren’t for record-breaking immigration, Australia’s economy would be in recession.
Australia’s GDP (gross domestic product) increased by 0.2% in the March quarter of 2023, despite a 0.4% increase in population. This means that GDP per capita declined by 0.2% in the March quarter.
The Reserve Bank of Australia (RBA) forecasts that Australia’s overall GDP would expand by only 1.2% in 2023, compared to the federal budget’s projected population increase of 1.9%, implying that per capita GDP will shrink by 0.7% this year.
S&P Global, a ratings agency, is equally negative about the Australian economy. It anticipates somewhat higher aggregate GDP growth of 1.4% in 2023, but only 1.2% growth in 2024.
This compares to projected population growth of 1.9% in 2023 and 1.6% in 2024.
Therefore, according to S&P Global, Australia will experience a two-year recession in per capita terms.
The economic pie in Australia will grow due to population expansion (immigration), but everyone’s slice of the pie will shrink.
History repeating:
The decade preceding the pandemic was a lost decade for Australian living standards, and it serves as a warning sign for the Australian economy, with immigration reaching new record highs.
Australia’s NOM increased from an average of 90,500 between 1991 and 2004 to an average of 219,000 between 2005 and 2019 – a 140% rise in immigration per year.
In fact, between 2000 and 2019, Australia had the largest population growth among big, developed nations, with its population increasing by 6.6 million (35%).
During this time, Australia’s economy became increasingly dependent on population growth, as shown in the following chart:
While aggregate GDP growth remained solid (albeit decreasing), per capita GDP growth was historically low.
In fact, even after omitting the effects of the 2019-20 COVID-19 recession, the Productivity Commission classified the 2010s as the poorest decade for per capita GDP growth in 60 years of data:
It’s a similar tale for real per capita household disposable incomes (HDI), with the 2010s marking the slowest decade of growth since the 1960s:
With the Albanese Government expanding immigration to new highs, Australia’s economy will become more reliant on population growth, while individual living standards will continue to fall.
The indicators Jim Chalmers should focus on:
Jim Chalmers’ “wellbeing framework” has clearly been structured to portray the federal government in a favourable light while concealing its failings in terms of plunging real wages, falling per capita GDP, and declining overall living standards.
Any genuine well-being framework would consider the federal government’s record immigration policy to be detrimental because it has a direct impact on many aspects of life.
For example, the type of house you live in and the amount you pay. How long you are stuck in traffic and whether or not you can get a train seat. Whether you can get into a hospital or a school. Or whether there is room at the park or beach.
The federal government’s extreme immigration policy has a negative impact on all of these quality-of-life indicators.
Yet, Chalmers’ “wellbeing framework” curiously has been designed in a way that portrays high immigration favourably.
Rather than 50 cherry-picked indicators of well-being, Treasurer Chalmers should concentrate on two basic measures – per capita GDP and real per capita HDI – and encourage policymakers, economists, and the media to make it their headline numbers (rather than overall GDP, which is currently the focus).
The Australian Bureau of Statistics (ABS) already publishes per capita GDP as part of its quarterly national accounts. It provides one straightforward and effective gauge of whether material living standards are rising.
Meanwhile, real per capita HDI is arguably the best single measure of material living standards available.
The sad reality is that Jim Chalmers would never agree to adopt either measure as the primary metric utilised by government to gauge wellbeing and Australia’s progress since it would demonstrate that the mass immigration policy had failed and the economy was in recession.
It is more politically convenient to conceal the drop in living standards by focusing on overall GDP, augmented with a slew of hand-picked “well-being” measures designed to obscure and confuse.
With population growth driven by mass immigration currently running at around 2%, overall GDP must grow at least that much to keep everyone’s share of the economic pie from shrinking.
Put another way, having a ‘technical recession’ means that the economy must shrink by more than the 2% that the population grows.
Even with the RBA’s aggressive interest rate hikes to combat inflation, this is not an easy task.
Adopting per capita GDP and real per capita HDI as Australia’s key economic indicators would expose the federal government’s use of ‘quantitative peopling’ mass immigration to disguise Australia’s economic collapse.
That is why the federal government will never use them and has instead conjured up Chalmers’ woke “well-being” balderdash to hide Australia’s falling living standards.
