Earlier this week, The AFR’s Michael Read published an analysis showing that Australian households suffered the sharpest decline in real per capita household disposable income in the world last year.
As shown in the chart above, real Australian household incomes fell by 6.1% in the year to September 2023, against a 1.7% rise across the OECD:
On Thursday morning, I explained the results on The Treasury of Common Sense with Radio 2GB’s Mike Jeffreys. Below are highlights from the interview.
Edited Transcript:
Michael Read at The AFR has done an analysis basically comparing Australia’s real per capita household disposable income – basically your incomes after adjusting for inflation, population growth, taxes and mortgage payments.
Australia’s real per capita household disposable income in the year to September 2023, which is the most recent data from the national accounts, fell by 6.1%. That was by far the biggest fall in the world, according to the OECD data Michael Read compiled.
Australia’s real per capita household income fell by 7.8% more than the OECD average, which went up by 1.7%.
That tells you that we’ve had a world record living standards collapse in Australia, which is not that surprising when you think about the high cost of iving.
We’ve had the increase in the tax burden, also the super high increase in mortgage rates, which have actually been higher here than just about anywhere else in the world because we have a very high share of variable rate mortgages.
It has been an absolute for Australian households. It’s not really an award you want to get, but unfortunately, we’ve got one.
Australia’s real per capita household disposable income is now tracking at about 2012 levels. So, we’ve effectively gone backward 12 years.
A prominent economist, Chris Richardson, projects that by 2026, we are only going to have recovered to about the 2015 level.
So, we’re basically facing a lost decade where living standards are going to decline. And by the end of this decade, I wouldn’t be surprised if everyone’s worse off than they were at the start of the decade.
Australia shoots itself in the foot so many times that it is ridiculous. We obviously have an abundance of riches. And we don’t manage to capture the benefits of those riches for our own citizens, unlike places like Norway.
We’ve created an energy crisis in Australia, even though we’re one of the world’s biggest energy exporters. On the East Coast, we’re paying world prices for our gas, which is basically pushing up our gas and electricity prices. So, we’re we’ve robbed ourselves of cheap energy.
Then we run a mass migration scheme that’s driving rents through the roof and forcing people to live in group housing and become homeless. It also creates inflation.
We run a stupid model Down Under, and unfortunately, our politicians don’t bother looking after us as they’re too busy looking after their mates.
