The Australian’s Adam Creighton has penned a great post today questioning Australia’s fake growth record, which has seen it supposedly overtake Netherlands for the longest period without experiencing a ‘technical recession’:
The reality is much less impressive: rapid population growth is responsible for Australia’s stellar economic growth run.
As you would expect, the more people that are living, working and consuming in Australia, the bigger the economic pie. But that doesn’t mean the slices get any bigger for individual Australians.
Indeed, Australia’s GDP per capita has shrunk since June last year. In two of the three latest sets of national accounts it has contracted.
It’s unfair to compare Australia’s expansion with that of other countries when our population is growing at about 1.5 per cent, or more than 300,000 people a year. That’s the second-fastest in the OECD. Japan’s economy is routinely derided but its population is shrinking and its economy is in fact still growing…
Far from having no recessions for 26 years, GDP per capita in Australia went backwards over a six-month period — the definition of a technical recession — in both 2000 and 2006…
GDP is a poor indicator of prosperity, even after adjusting for population…
If the politics of rapid population growth ever weigh on Australia’s immigration levels, on current trends Australia will have far more “recessions’’ than it has been used to.
The Australian’s Judith Sloan has made similar observations:
…everyone knows that GDP is a flawed measure, particularly if it is not expressed in per-capita terms. Successive Australian governments have been keen to boost population growth through excessive immigration intakes and have been able to disguise two recessions by not measuring changes in GDP per capita…
Well said. As I illustrated in detail in this morning’s post, Mapping the decline in Australian living standards, better measures of living standards than GDP have all deteriorated over the past five years in real per capita terms.
Even when we look at just GDP per capita, 10-year annualised growth has crashed and is now tracking at its lowest level on record – i.e. even worse than the 1980s and early-1990s recessions:
Breaking the Netherlands’ supposed growth record is also rather meaningless, given Australia is a high population growth (immigration) nation, whereas the Netherlands is not:
Since 1960, Australia’s population has grown by a whopping 136% versus the Netherlands’ 48%:
And over their respective ‘record’ phases, Australia’s population growth has been far higher than the Netherlands – i.e. circa 40% versus just 15%:
Accordingly, the Netherlands’ growth in real GDP per capita has comprehensively beaten Australia’s since 1960:
As well as during their respective uninterrupted ‘booms’:
Clearly, much of Australia’s ‘growth’ success has been largely a mirage, brought about by running one of the world’s biggest mass immigration programs. Viewed on a per capita basis, the story is far less impressive.
Time for change.
