I reported last week how Australian households have endured the largest decline in real per capita disposable incomes on record after falling by around 8% from their mid-2022 peak.

Australia’s decline in real per capita household disposable incomes has also been the largest in the OECD since the beginning of the pandemic.

Analysis of the latest national accounts by the Coalition has led it to conclude that households have $19,000 less disposable income to spend a year than before Labor came to power, with shadow treasurer Angus Taylor saying that even Treasurer Jim Chalmers’ figures suggest it will be at least 2030 before people will be as well off as they were before Labor came to power.
“This means they have less of their hard-earned money to spend on the things they want and need”, Taylor said.
“Sadly, this will be a lost decade for so many Australian families who are really struggling to make ends meet”.
However, Australian National University economist Ben Phillips says pandemic-era stimulus meant living standards were not as bad as suggested by Taylor, with Phillips arguing that real household disposable income per person was similar over the five years to 2024 to what it was under the Coalition for the five years before the pandemic.

“In my opinion there is too much interest in the outlier COVID years with the artificial gain then fall”, Phillips said.
Phillips is correct: Australia’s household disposable income growth has lagged for more than a decade under Labor and Coalition governments.
The following chart from The AFR, based on OECD data, shows that Australian per capita disposable incomes grew by only 0.15% annually over the past decade, one of the worst performances in the advanced world.

Australian household income growth has also badly underperformed the OECD average since before the Global Financial Crisis in Q1 2007.

Over this period, Australia’s real per capita household disposable income has increased by only 17%, versus the OECD’s increase of 30%.
Underlying Australia’s sluggish income growth is poor productivity.

Given Australia’s poor labour productivity and the expected decline in the nation’s terms of trade, it is likely that the growth in real per capita household disposable income will remain depressed.
Australians are facing several lost decades of declining living standards once broader liveability measures such as smaller and more expensive housing, infrastructure congestion, crime, eroded services, and environmental degradation are taken into account.
The Cyberpunk Dingo’s latest video labelled Australia’s situation “managed decline”.