Australia’s GDP per capita continues to retreat, falling for three consecutive quarters to be 0.3% lower over the year to September:
More importantly, real disposable income has collapsed to around 2010 levels:
Economist Judith Sloan argues that the main factors behind the fall in household disposable income include increased mortgage rates and a rising tax take.
Sloan notes that interest paid on mortgages rose by close to 8% in the September quarter:
Whereas income tax paid by households also increased by close to 8% over the quarter to a near all-time high:
Alongside below inflation wage growth, these forces have hammered household disposable income:
Source: Justin Fabo
Judith Sloan warns that Australians will need to get used to falling standards of living if productivity does not improve:
“The principal reasons for this dismal outcome are: inflation, rising mortgage rates and a rising tax take”, Sloan writes.
“The insufficient growth in the economy, as well as the increase in the population due largely to immigration, has sealed this depressing result”.
“The tiny gains in real wages he has been highlighting don’t override the very real decline in average household living standards”.
“And without productivity growth – it fell by over 2% in the year ending in the September quarter – we will need to get accustomed to much lower living standards”.
Judith Sloan is correct, of course.
The 2010 to 2020 period was a “lost decade” for Australians, with real per capita household disposable income growing by just 0.96% a year on average:
Already, this decade is shaping up to be even worse, with real per capita household disposable income averaging just 0.62% annual growth.
The reality is that the only thing keeping the economy from a technical recession is break-neck population growth:
However, every Australian’s share of the economic pie is shrinking, while their broader living standards are being crush-loaded by the never-ending migrant flood, which is overwhelming housing, infrastructure, and the environment.
