Which Parts of The Australian Economy Are Performing Poorly?

ThithLord on 04/03/2025 - 11:48
Last edited 04/03/2025 - 14:32

Here's a list of where the Australian economy is performing quite well: (credit: Alan Austin)

Is there data to suggest the economy is performing poorly, as stated ad-nauseum by the ABC?

I am interested to see how OzBargain can explain the economy is performing poorly?

Financial

Comments

  • Gdsamp on 04/03/2025 - 11:54
    +69

    if economy good why cant afford shelter

      • happydude on 04/03/2025 - 12:01
        +48

        I was wondering if this was more a pollical post than economic one.

        Just got my answer.

          • happydude on 04/03/2025 - 12:52
            +32

            @ThithLord: You reduced reduced a complex issue of housing access and affordability to a single person and a single policy from 1999, then adding "next question".

            If you really don't think there has been any feasible policy options to counteract the impact of the CGT discount in the last 25 years, then you don't seem to grasp the complexity of the economy in order to adequately discuss it.

            CGT discount was to remove the more complex calculations of indexing the cost base to CPI. Prior to 1985 there was no CGT.

            The issue isn't that it has no bearing, the issue is you think it is the only bearing and are apparently unwilling to engage in discussion that says otherwise.

            This is a Labor shilling post with cheery picked articles, not an economic discussion.

              • happydude on 04/03/2025 - 12:57
                +35

                @ThithLord: Yes, Next question

                • ThithLord on 04/03/2025 - 13:00
                  -5

                  @happydude: Sure, why would the nature of why the CGT Discount was supposedly introduced, lessen the importance of why it has caused so much speculation on the Australian housing market? Is there a far larger factor at play, in your opinion?

                  • LanceVance on 04/03/2025 - 14:42
                    +12

                    @ThithLord: Oh I don't know, immigration?

                    • tassietigermaniac on 05/03/2025 - 08:48
                      -4

                      @LanceVance: Huh? House prices are being driven up by the use of houses for investments way way more than immigration. Since when were we blaming immigration for the issue of treating houses as investments instead of shelter?

                      • R4 on 05/03/2025 - 12:59
                        +5

                        @tassietigermaniac: While immigration is not the only cause of house price inflation, it is definitely part of the equation.

                      • happydude on 05/03/2025 - 14:03
                        +3

                        @tassietigermaniac: Sure, but in economics everything is connected, especially the issues you have posted.

                        The increase in immigration has made rentals harder to access, this in turn drives rental prices up, which in turn made housing a more attractive investment, which in turn drives up property prices.

                        It's not one thing. The government needs a strategy and to implement it.

                        Unfortunately the problem with politics at the moment is the idea of the independents and minor parties. They vote on each piece of legislation individually, which means the system is losing the ability to deal with the more complex issues that require multiple policies to repair a single issue like housing.

                        It is now almost impossible to take a holistic view of issues. They all get reduced to one, like its CGT, or immigration, or greedy investors depending on the base of the political representative.

                        • tassietigermaniac on 05/03/2025 - 14:14
                          +1

                          @happydude: I reckon if you remove negative gearing and any relief for CGT and you'd find a lot of the issues disappearing. I completely agree with what you say but encouraging people to own their own homes by reducing the prices by reducing the consolidation of ownership seems to be the most easily implementable and sustainable solution. I'm happy for my house price to tank if it means an easier time for the younger generations. The issues all feed into each other but to sustainably fix it you need to find a way to encourage people to own their own houses and disincentive rentals

                          • LanceVance on 05/03/2025 - 15:42
                            +1

                            @tassietigermaniac: It may help but it won't solve the problem. Immigration is the single biggest factor because its simple supply and demand, more people chasing a lower and lower number of dwellings per capita contributes massively to the price growth. Treating houses as investment vehicles just makes it worse.

                            • k15866 on 07/03/2025 - 09:45

                              @LanceVance: So I've heard this line used in media quite a lot recently that immigration is a cause of increased house prices and I'm sure it's at least partly true, but I also question whether it's what has led to where we are but not sure if my thinking is flawed.

                              That is that most of our immigrants come from India and China. and (presumably) most immigrants aren't coming here cashed up and need to find a job, they're probably young professionals starting a family because that's what the government wants to lower our average age and fill job shortages, maybe they need to support family overseas, spend on a bunch of assets as a new starter in a country. So I didn't think they would have the purchasing power to push housing affordability above that for the average household. Do we think they are in an advantaged position from the day they arrive in Australia, such that they can compete with someone born here and if so, why?

                              Also if supply lags behind demand, the price would go up, and continue going up until it reaches the extent of average household affordability (whatever that is/means) but only to the extent to which someone can still buy it. But in our market it seems to be going beyond this point because someone(not the average household) is still able to buy. So then who can still buy it? The immigants? The bears? Or is this a flawed perspective?

                              Another thought I've had is that, let's say we increase supply and due to the nature of things, it's a gradual release, rather than suddenly on Jan 1 we release 500000 dwellings, what stops those with the most money/borrowing power from outbidding the average consumer. What would be the implications of releasing these new dwellings to first home buyers only?

                              • LanceVance on 11/03/2025 - 10:27

                                @k15866: @k15866 like most things it's a mixture. Moving to another country is an expensive proposition in the first place so its not like you're getting people with nothing behind them coming here. I live in Glen Iris, quite expensive inner Melbourne suburb and my next door neighbour is a real estate agent in the area. Houses that rarely go for under $2m according to him are snapped up at least half the time by Chinese who recently moved here or are purchasing from overseas. Indians it seems are less likely to have these funds and tend to populate the outer suburbs more.

                                As to how and why they're able to compete, you can't assume that everyone from countries that are generally poorer are poor. And clearly they can compete because it isn't just rental prices going up but price to purchase as well. There's also a huge transfer of wealth happening in Australia, boomers dying or gifting their kids deposits to help them get their foot in. So as to how and why people can afford, same as the immigrants, enough people clearly can because the market is still churning. That being said mortgage stress is on the rise, so theres a higher number of people just scraping by.

                                Increasing housing supply is very slow. Yes you could release to first home buyers only, but immigrants would come under that umbrella, so I don't think it would change much. There should be a drastic decrease in immigration. I'd argue we could do with 'net zero' immigration for at least 5 years. That and banning foreign ownership and removing the incentives to treat housing as investments in my opinion all need to be done to change the current state of lunacy that is the Australian housing market.

            • afah0447 on 05/03/2025 - 12:55
              +4

              @happydude: I remember when Joe Hockey was Treasurer and a reporter asked him, back then, about high housing prices, he said:

              'If you can't affored to buy a house, get a higher paying job'

              The LNP will never care about sky high housing prices.

            • supersabroso on 06/03/2025 - 00:53
              -2

              @happydude: He's not wrong mate, we can argue about why house prices are expensive due to 10,000 factors for the next 100 years. However, the capital gains discount was a key catalyst that initiated the housing craze and spiked it up through the roof. All of a sudden, people flipped their views and loved negative gearing. The richest 10% of Australians get about 80% of the benefits from negative gearing, that's 4x the sum of all the benefits the remaining 90% get. We simply don't need any investment in existing properties that don't create new stock. Negative gearing/the capital gains discount needs to go. If it doesn't, Australia will turn into a society of rich people lording over their peasant rent slaves. This article and charts sum it up really well: https://www.macrobusiness.com.au/2024/03/go-back-to-the-futu…

      • Drakesy on 04/03/2025 - 21:07

        I mean that was part of the problem

    • coffeeinmyveins on 04/03/2025 - 11:57
      +13

      It's working as expected. Transfer of wealth from the poors to the rich. Carry on.

    • trapper on 04/03/2025 - 11:58
      +19

      Population growing faster than housing construction.

    • MonkEE on 04/03/2025 - 17:00
      +8

      Because the liberals have been pumping house prices up over the decade.

      https://www.corelogic.com.au/news-research/news/2022/the-lon…

      • Ryk on 05/03/2025 - 17:35
        +5

        6 decades

    • justworld on 04/03/2025 - 18:59
      -1

      You can't afford rent? It's probably a combination of low wages or high expenses.

      • surg3on on 07/03/2025 - 12:17

        wow. Genius here ^ . OP should earn more and/or spend less. Pull self up by bootstraps.

        • justworld on 07/03/2025 - 16:15

          What's the alternative?

    • reactor-au on 05/03/2025 - 10:18
      +4

      Because more than half of the good stats in the post also contribute negatively to cost of living.
      Half these markers end up pushing up business costs, pushes up consumer prices, pushes up cost of living, and wages still can't keep up with inflation.

      Basically the government sold us out to immigration to boost GDP figures and keep the ponzi scheme from collapse, now spinning us the idea that we're winning but actually we're poorer and more in debt than ever at the end of the day (obviously there are exceptions, usually the very rich).

    • cloudy on 05/03/2025 - 14:13
      +2

      if economy good why cant afford shelter

      I'm going to be contrarian and say it's because everyone making so much money and can borrow so much money that property prices are nuts.

      If there was a good ol' fashion recession that would smash down house prices and i'll rejoice.

      • sangohan on 10/03/2025 - 14:24

        why does price have to fall via a recession? Why can't prices fall by increasing supply at a higher rate?

        Who is stopping supply increases?

    • Brianqpr on 06/03/2025 - 08:39
      +1

      A strong economy usually means high prices because if everyone is doing well then they're all competing for the same houses.

    • sandman87 on 07/03/2025 - 15:02

      The Australian Housing Ponzi

  • Cluster on 04/03/2025 - 12:01
    +21

    What I see missing on the list: increasing housing cost as a multiple of the average income.

    If you own two or more properties, you're good. If you own one, it does not benefit you (insurance, etc costs increase. The next house you buy has also gone up in price). If you don't own one… you'll be living with your parents into your 30s or sharing a house with four strangers.

    • freefall101 on 04/03/2025 - 13:30
      +3

      We're at about the OECD average, just slightly above.

      I think I need to buy a house in Romania and find a job that's 100% WFH.

      • Cluster on 04/03/2025 - 13:35
        +8

        Yes, it's a global problem. Canada is even worse. They look at our house prices and wonder what we're complaining about. That doesn't mean the situation is okay here.

        Adelaide has the 9th most unaffordable housing prices in the world. Adelaide! At least we're finally on the global stage….. wooo! :-P

        https://www.realestate.com.au/news/three-aussie-cities-ranke…

        • freefall101 on 04/03/2025 - 13:39
          +4

          It's not called Radelaide for nothing!

          Get your point, it's not ok and it's hitting people hard. It's the problem with trying the spruik the economy, saying "at least you're not in x country" is not a way to win the vote of someone being unable to afford a rental.

  • soan papdi on 04/03/2025 - 12:02
    +23

    I am interested to see how OzBargain can explain the economy is performing poorly?

    Corporations are making more profits, the country is getting richer overall. However, it also feels like the divide between rich and poor is also widening. I don't have data but feels like those in the starting stage of their career will really find it hard to become prosperous. Some will do well but we're talking on the whole. Just "working harder" won't cut it without some luck or assistance from BOMAD.

    • ThithLord on 04/03/2025 - 12:24
      +3

      Can't disagree with you there

    • b4rg41nz on 06/03/2025 - 06:49
      +2

      Take a look into the gini coefficient which is a statistic that measures income and wealth inequality

      https://www.abs.gov.au/statistics/measuring-what-matters/mea…

      • soan papdi on 06/03/2025 - 07:28
        +1

        Thanks, wasn't aware of this measurement. Also came across this article for some layman explanation. Some young people are doing well but most are struggling

        https://povertyandinequality.acoss.org.au/news/new-data-show…

        Wealth inequality is also growing among households aged under 35, even though they hold just 5% of all wealth. The average wealth of the highest 10% rose from $928,000 to $2 million (an increase of 126%) since 2003. At the same time, the average wealth of the lowest 60% of younger households – largely excluded from home ownership – rose just $68,000 to $80,000 (39%).

  • Cluster on 04/03/2025 - 12:05
    +34

    We're actually in a recession. Been in one for over one and a half years.

    https://ipa.org.au/publications-ipa/media-releases/australia…

    Yes, GDP is growing, but per capita GDP is falling. We're propping up our GDP by importing huge amounts of people, who all need to buy furniture, housing, appliances, cars, etc. But per capita our GDP is shrinking and continues to shrink.

    • Crow K on 04/03/2025 - 12:13
      +5

      This is one of the reasons Dutton dropped his "cancel all immigration to a bigger extent than Labor would" talking points

      • ThithLord on 04/03/2025 - 12:19
        +20

        Didn't the LNP approve, like, over 600k VISAs before leaving office, that Labor had to deal with once taking office? Approved VISAs cannot just be cancelled on the fly

        • tenpercent on 04/03/2025 - 20:13
          -2

          Why not? Pass a law saying the Minister can cancel recently approved visas and just do it.

          • greatlamp on 05/03/2025 - 07:55
            +4

            @tenpercent: A visa is a contract with the Australian Government protected by law. The minister would need to individually cancel each visa, the visa holder would be entitled to challenge the legality of the cancellation in our courts. So it would only be successful if the law was changed in advance to give governments authoritarian control over visas. That isn't something you want to provide your future political rivals

            • tenpercent on 05/03/2025 - 08:06

              @greatlamp:

              give governments authoritarian control over visas

              Umm… who controls visas and immigration law now?

              • greatlamp on 05/03/2025 - 08:07
                +1

                @tenpercent: Changing a law requires parliament agreement not just the sitting government to decide.

                • tenpercent on 05/03/2025 - 08:10
                  -1

                  @greatlamp: Yes, obviously. And there's plenty of minor party support in the Senate that would help carry this change through. Even LNP would jump on board if Labor ever decided to do something about excessive immigration.

                  • greatlamp on 05/03/2025 - 08:15
                    +1

                    @tenpercent: They can address migration by changing the visa rules for new visas. They choose not to.

                    • tenpercent on 05/03/2025 - 08:19
                      -1

                      @greatlamp: Yes, both "sides" (two cheeks, one arse) choose not to. And ThithLord (and others like him/her) play pretend with notions like "the LNP did it worserer so that makes Labor's inaction betterer".

                      • greatlamp on 05/03/2025 - 09:04
                        +1

                        @tenpercent: Both sides are working hard to reduce the wages of people that need to work for a living

                        https://www.education.gov.au/international-education-engagem…

                        • justworld on 05/03/2025 - 12:31

                          @greatlamp: I work for a living and am fine (I'm in law) as is my partner (medicine). Other fields including investment banking/private equity, FAANG, quant, engineering, consulting etc are doing fine as well.

                          If your point is that migration reduces wages of low-skilled workers, you're right. But they're not the only ones who work for a living, you know.

                          • greatlamp on 05/03/2025 - 15:33
                            +1

                            @justworld: Your partner working in medicine would be directly impacted by this. You may not as experience in the legal profession isn't transferable even if the qualifications are.
                            This agreement is with a country that has 50x our population and 1/10th of our wages. The incentive for a disproportionate number of migrants to move to Australia just got even stronger.

                            I'm sure you are intelligent enough to understand this, I can only speculate why you think lower income Australians deserve to struggle more

                            • justworld on 05/03/2025 - 15:42
                              +1

                              @greatlamp: Re medicine, no surgeon or consultant physician/anaesthetist is affected by migration. The surgical colleges are very strict about who they accept as fellows.

          • Crow K on 06/03/2025 - 09:55
            +1

            @tenpercent:

            Why not? Pass a law saying the Minister can cancel recently approved visas and just do it.

            Alright, so you don't understand how any of this works.

            This resolves some other on going questions about the quality of your responses.

            • tenpercent on 06/03/2025 - 20:21

              @Crow K: In this instance exactly what am I allegedly not understanding?

              • Crow K on 06/03/2025 - 22:33

                @tenpercent: If you can't tell, maybe you can ask the government to pass a law saying you understand how it all works and that you actually can tell after all.

                • tenpercent on 07/03/2025 - 08:28

                  @Crow K:

                  If you can't tell

                  Well it seems you can't tell either. Are you just here to crow about nothing?

                  What exactly (apart from a lack of negotiation skills with cross-benchers and the opposition) would stop them from pushing through an amendment to the Migration Act to expand the reasons and circumstances under which a visa may be revoked?

        • frewer on 05/03/2025 - 10:10

          So uni-parties is making AU worse off? Roger that, who should I vote red or blue?

        • Brianqpr on 06/03/2025 - 08:40
          +1

          Indeed, but you won't hear their adoring media talking about it.

        • boretentsu on 09/03/2025 - 08:18
          +1

          Approved VISAs cannot just be cancelled on the fly

          Ask djokovic

    • ThithLord on 04/03/2025 - 12:13

      What does Australia being one of only three OECD economies to have recorded positive quarterly growth every quarter for the last three years tell us, though?

      • Cluster on 04/03/2025 - 12:15
        +16

        Gross GDP and per capita GDP are two separate figures. The link above is for gross GDP. Our gross GDP is being propped up by importing hundreds of thousands of people every year. In 23/24 the net migration was +446,000.

        • RedHab on 04/03/2025 - 14:51
          +2

          This is also one of the reasons why we have a shortage of housing - see this graph:

          https://api.macrobusiness.com.au/wp-content/uploads/2024/10/…

          • neoleo on 04/03/2025 - 18:56
            +1

            @RedHab: Macrobusiness has a lot of bias, not neutral. The owner/writer is anti immigrants but his name is like from Netherlands lol (doesn't matter if he was born here or not).

            • Bluto Mindpretzel on 04/03/2025 - 19:13
              +4

              @neoleo: Anti immigrants… are you trying to say they are racist? They are simple anti excessive immigration. The whole "you question the immigration rate, zomg racist!" is so tired.

              • neoleo on 04/03/2025 - 22:52
                -1

                @Bluto Mindpretzel: Yes, racist too. Certain writings mentioned about Indians and Chinese in very bias words for example. If they write like normal news, the writings will have less bias and look like more general articles. I read a lot of news. So, macrobusiness is worst than The Herald Sun, The Guardians, ABC, news.com.au, etc. I read SMH, The Age, AFR, tech news, etc. too. The more sources we read, better and well informed. So, we know if certain news have more bias than the others.

                • CurlCurl on 05/03/2025 - 11:43

                  @neoleo:

                  I read a lot of news.

                  There is your problem.

                  The more sources we read, better and well informed. So, we know if certain news have more bias than the others.

                  Bias to you can be non bias to others.

            • justworld on 04/03/2025 - 19:28

              @neoleo: Macrobusiness is read by useless shit kickers who have bad finances and want to find some external factor to blame for said lives. They will never blame themselves for not being good enough to achieve their financial aims even though the majority of Aussies are just fine and any able-bodied person with half a brain is doing completely well.

      • Drakesy on 04/03/2025 - 14:28
        +22

        If you take off your rose-tinted glasses Australia is only there because we have literally imported hundreds of thousands of people.

        The one thing that makes Australia so liveable is the very thing that's bringing about its undoing.

        An affordable way of life is no longer, people are being worked to the bone for very little benefit, when you take away the goal (owning a house) people don't have the motivation to work harder.

        • Leeroy Jenkins on 04/03/2025 - 16:26
          +3

          This.

          But why not use immigration as an easy target to direct people's attention?

        • justworld on 04/03/2025 - 19:29
          -3

          People are being 'worked to the bone'? The average state government employee is on $120k+ doing very little work in a very cushy job. Minimum wage is among the highest in the world. If you think this counts as being worked to the bone then please feel free to look at literally any other country in the entire world.

          • Drakesy on 04/03/2025 - 21:09

            @justworld: $120k is pretty much median wage
            And its not exactly like you'll be able to afford a house with that.

            • justworld on 05/03/2025 - 00:11
              +2

              @Drakesy: You can afford a flat or unit with it quite easily

              Not sure why you think a single income should be able to buy a 3BR house

        • skillet on 05/03/2025 - 09:48
          +5

          It's all about perspective, there are various parts of the world where people work a lot harder than Australians. If you think so, you haven't seen it yet. Australians don't work to the bone, most of us enjoy a good work life balance yet complain about life.

          • Drakesy on 05/03/2025 - 11:47
            -1

            @skillet: I agree that its all relative
            But if your parents are telling you to just buy a house when it now takes 2 people and less kids and they themselves have an investment property its hard not to complakn

      • R4 on 04/03/2025 - 15:40
        +8

        Massive immigration helps explain that
        Immigration - good.
        Mass immigration - bad.

      • Bluto Mindpretzel on 04/03/2025 - 19:15
        +1

        AKA "fake growth" aka "growth the average punter does not benefit from"

    • ramshead on 05/03/2025 - 08:07
      +5

      The IPA (Institute of Public Affairs) is an interesting outfit. According to Wikipedia:
      The Institute of Public Affairs (IPA) is a conservative non-profit free market public policy think tank,[2][3][4] which is based in Melbourne, Victoria, Australia. It advocates free-market economic policies, such as privatisation,[5] deregulation of state-owned enterprises, trade liberalisation, deregulation of workplaces, abolition of the minimum wage,[6] criticism of socialism,[7] and repeal of Section 18C of the Racial Discrimination Act 1975.[8] It also rejects large parts of climate science.[9] Possibly there might be a wee bit of bias in anything they publish.

    • Gdsamp on 05/03/2025 - 11:57
      +6

      Per capita recession is over

      GDP per capita grew 0.1 per cent this quarter following seven consecutive quarters of falls.

      • Drakesy on 05/03/2025 - 14:19
        +2

        Hooray, now to have 15 years of catchup

      • Gdsamp on 05/03/2025 - 14:21
        +1

        SOFT LANDING !

  • Jaduqimon on 04/03/2025 - 12:07
    -1

    as a middle class citizen, i do feel like my lifestyle has improved. the rich getting richer? sure but I am also getting richer, just not at the same rate as them.

    • carwashhair on 04/03/2025 - 12:10
      +14

      the golden shower of trickle down economics

    • greatlamp on 04/03/2025 - 16:28
      +6

      That means you are getting poorer. If the rich are getting richer at a faster rate than you are, their wealth - the assets they own - are growing faster than the assets you own.

      This is largely invisible if you only look at the cost of consumer goods and ignore assets, but when you suddenly find yourself unable to afford the home that you could have a decade ago, you have become poorer.

      • Jaduqimon on 04/03/2025 - 17:03
        -1

        Yeh so it's relative. I am also getting richer faster than the lower middle class.

        My living standards have improved now that I'm in my late 30s compared to when I was in my late 20s. And that's enough for me. No need to compare to Jack and Jill next door.

        • Drakesy on 04/03/2025 - 21:10
          +1

          I feel like i had more purchasing power as a student when going out as compared to what i do now.

          Having said that kmart has never been cheaper.

          • greatlamp on 04/03/2025 - 21:28
            +1

            @Drakesy: Governments have thrown billions into the economy for over a decade and it seemingly made no impact on inflation.
            https://www.rba.gov.au/speeches/2015/sp-so-2015-10-08.html

            The economists eventually worked out this was due to 'technological improvement'
            https://www.abc.net.au/news/2019-07-29/inflation-may-be-low-…

            What has actually been happening is that China's high tech factories produce goods much more cheaply than the factories they displaced. Notice this has increased literally exponentially - during the same timeframe that near zero interest rates across the developed world 'didn't increase inflation'
            https://www.aei.org/carpe-diem/chart-of-the-day-china-is-now…

            China isn't going to do that again, and noone else is either. In fact it's reversing as the world de-globalizes in response.

            That means the era where CPI is artificially lowered by Chinese imports is over, and it will no longer be disguising the rapid increase in poverty, reduction in living standards, and accumulation of wealth by the richest segment of the population.

        • surg3on on 07/03/2025 - 12:19

          Being richer in your 30's than your 20s is called getting older, not getting richer. if you dont have more than when your were 20 and an untrained idiot you are doing something drastically wrong.

    • skillet on 05/03/2025 - 09:52
      +5

      Unfortunately the middle and lower class exists to support the wealth of the 1%

      • Jaduqimon on 05/03/2025 - 10:09
        -5

        yes keep telling yourself that.

  • Ugly on 04/03/2025 - 12:15
    +25

    Almost all of the employment growth is in government.
    Record numbers of business insolvencies.
    This is not a sign of a healthy economy.

    • ThithLord on 04/03/2025 - 12:27
      -1

      Almost all of the employment growth is in government.

      Record numbers of business insolvencies

      As evidenced by?

      • Drakesy on 04/03/2025 - 14:26
        +11

        NDIS

        • ThithLord on 04/03/2025 - 15:00
          +2

          Right, I stand informed.

      • Dogsrule on 04/03/2025 - 21:41
        +11

        https://apo.org.au/node/329341

        Between August 2022 and August 2024, 82.1% of new persons employed were in the public sector.

        The total number of new public sector jobs created since August 2022 has already outstripped the number created from August 2014 to August 2022 by approximately 40%.

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