Australian National Accounts Reveal Living Standards Going Backwards

The latest Australian National Accounts release has revealed that Australians are continuing to struggle financially with steadily increasing inflation and reduced household savings.

On Wednesday the 6th of December the Australian Bureau of Statistics released the latest quarter release of the Australian National Accounts, described as the “most comprehensive set of economic data, attempting to capture the value of all the market goods and services produced and consumed in Australia,” by the ABC’s Michael Janda.

Covering June to September of 2023, the accounts reported that inflation remains elevated, with consumer prices growing 1.2% compared to the previous quarter and 5.4% over the entire year. On a CPI basis rent for housing inflated by 7.6% over the past twelve months, the largest annual increase since 2009.

Overall, Australia’s GDP only grew by 0.2% this latest quarter and 2.1% for the past year. The accounts also note that “ongoing high levels of migration to Australia saw GDP per capita fall 0.5 per cent, following a fall of 0.1 per cent in June.” Furthermore, while wages grew over the last quarter, as described by Mr. Janda, “workers hardly kept any of it. Most of that pay rise went to the government and banks.”

Household savings also fell dropping to the lowest levels seen since December of 2007, with the households savings to income ratio falling from 2.8% to 1.1%. The ABS noted two major contributing factors: income taxes and mortgage repayments. Australians were hit by the added income taxes caused by the end of the low and middle income tax offset schemes and added interest repayments as borrowers came off fixed rates. Both of these figures grew by 7.6% in the last quarter.

Gareth Aird, the head of Australian Economics at the Commonwealth Bank, stated that income tax payable from Australians rose by 23.4% or by more than $17 billion over the past year - a figure Mr. Aird described as “astonishing. Mr. Janda noted it was the combination of Australia’s resource sector and taxes from working Australians that has led to government’s announcing “surprise surpluses.”

Mr. Aird also highlighted that housing debt has grown more than 70% over the past year, an increase of more than $12 billion, or more than 170% compared to the lows of the pandemic.

Mr. Janda simplified the various factors affecting Australians living standards:

“Factor in the biggest price rises for decades and real household disposable income slumped a further 1.7 per cent between July 1 and September 30. This key measure of household living standards is down 5.6 per cent over the year and 8.3 per cent since its peak two years ago. On some per capita measures, the real living standards of Australian households are back where they were eight years ago.”

Sources & Further Reading

https://www.abs.gov.au/statistics/economy/national-accounts/australian-national-accounts-national-income-expenditure-and-product/sep-2023

https://www.abc.net.au/news/2023-12-07/the-gdp-numbers-explain-why-you-are-feeling-broke/103196632

https://www.abs.gov.au/articles/11-things-happened-australian-economy-during-september-quarter