The new condition afflicting Australia’s economy
Symptoms, causes, consequences, strategies
Charlie Nelson July 2015
I have been observing Australia’s economy over the past 35 years and have experienced boom times and recessions. The period since 2008, however, is unique and very worrying. The symptoms over this period are a switch in many growth indicators from steady growth towards a sideways movement – a syndrome which I have called Standstill. It is a stasis in which there are no forces propelling important indicators of our economy, or if there are positive forces they are offset by negative ones.
One of the most concerning indicators is per capita household disposable income growth shown in the chart. We became accustomed to ever increasing income growth until 2007 and now we are suffering ever decreasing income growth. If the recent trend were to continue, income would be shrinking by 2016.
GDP per capita has slowed since 2007 and so have many other economic indicators. Our living standards are approaching a standstill and could go backwards over the next 15 years.
My report identifies the reasons for the Standstill and outlines the potential consequences. We may be able to avoid falling living standards, but only if we urgently abandon the complacency that set in during the mining boom and develop new policies. The report suggests strategies for preventing the Standstill from tipping into declining living standards.
The report is available at www.foreseechange.com.au.