Like clockwork, Treasurer “Spin” Jim Chalmers was quick to talk up Wednesday’s soft GDP results of the Australian Bureau of Statistics (ABS), which saw the aggregate economy grow by 0.4% over the June quarter to be 2.1% larger year-over-year:
“The national accounts show that our economy is quite resilient and robust in the face of everything that’s coming at us from around the world”, Spin Jim declared.
“In fact, growth is as strong if not stronger than every major advanced economy. The private sector is leading that growth, not public spending”.
What Spin Jim conveniently failed to mention is that per capita GDP growth was flat and that Australia’s economy has only been growing “stronger” than other advanced economies because it is running a mass immigration policy that is growing Australia’s population significantly faster than everywhere else:
Chart from Justin Fabo at Antipodean Macro
Meanwhile, Australia’s labour productivity growth (GDP per hour worked) remained flat in the June quarter, falling 0.2% year-on-year and 5.0% since the March quarter of 2022.
The non-market (government-funded) sector has driven Australia’s poor productivity growth:
Chart from Justin Fabo at Antipodean Macro
As illustrated below by Alex Joiner from IFM Investors, government spending has been easily the fastest-growing component of GDP over the past decade:
Chart from Alex Joiner (IFM Investors)
As a result, Australia’s growth in labour productivity has ranked among the lowest in the OECD over the past decade:
Chart from Justin Fabo at Antipodean Macro
For this reason, Australia has recorded the weakest growth in real per capita GDP in the advanced world since the Albanese government came to power in mid-2022, down by 0.3% since Labor took office:
Chart from Alex Joiner (IFM Investors)
In a similar vein, Australia’s real per capita household disposable income growth over the 11 years to March 2026 has been among the softest in the OECD, growing by only 6.0% in Australia compared to an average of 20.7% across the OECD:
Spin Jim needs to recognise that without productivity growth, per capita GDP, incomes and living standards cannot grow. It also means that inflation will rise whenever demand increases.
The reality is that Australia’s economy is caught in a stagflationary trap, reliant on immigration and government spending to grow in aggregate, while everyone’s share of the economic pie stagnates.
The situation won’t improve until productivity growth improves. And the suite of policies on offer from the Albanese government – encompassing energy, immigration, and fiscal policy – is making the situation worse.
