Australia's economy is on government sponsored life support.
'The only thing keeping Australia's economy out of recession is government spending and immigration' - ABC news.
Figures released today about the Australian economy unfortunately continue to paint the picture this blog has been banging the drum about for quite some time.
Today, the new numbers about the economy show an anemic and fragile Australian economy that, if its government sponsored life-support was taken away, would get more than the sniffles.
GDP growth has come in ever so slightly in the positive (0.2%) thanks to immigration. But the important number is GDP per capita which has had its 6th consecutive decline and is just -0.4%.
As the ABC news highlights without Government spending and immigration Australia would be well and truly in a declared recession.
The solution, which every commentator with a head of grey hair and the ability to nod sagely and knowingly says that improving productivity is of course the answer! And it is! The only problem is, no one seems to know how to improve it!
As this blog covered in February this year, Australia’s productivity had then hit a 40 year low.
Unfortunately for us all what we wrote in February still holds true today: “The RBA says productivity is “In economics, productivity refers to how much output can be produced with a given set of inputs. Productivity increases when more output is produced with the same amount of inputs or when the same amount of output is produced with less inputs.”
In short: yes Australia is busy but it is not making enough stuff (other than latte’s, gyms and yoga) that makes the Australian economy more efficient, more effective or can be sold overseas.
And as we hit this 40 year low - and a 23 year slide since 2000 - the problem now I’d argue is that Australia doesn’t know, doesn’t have the experience, doesn’t have the pedigree to turn the ship around and be productive.
It is safer, and easier to simply dump money into a pile of bricks (otherwise known as homes) and sit on that for 12 - 36 months and sell it at a profit, than put that same money into starting a business.”
Einstein is credited with saying “The definition of insanity is doing the same thing over and over and expecting different results.” - so if you know how to get Australia’s out of its productivity funk please raise your hand and get a meeting with every state and federal leader that you can, because the current solution ain’t working (although ironically we do need a lot more houses).
Today let’s hear from Depeche Mode’s ‘get the balance right’