Na­tion feels pinch of emerg­ing post-boom era

The Sunday Mail (Queensland) - - BUSINESS - TERRY McCRANN

FOR the first time this cen­tury, Australia is ac­tu­ally get­ting poorer. The coun­try over­all is get­ting poorer and so is the av­er­age Aussie.

The statis­tics that tell us what is hap­pen­ing in the over­all econ­omy came out last Wed­nes­day. They showed the econ­omy grew at a slug­gish but – com­pared to most other de­vel­oped coun­tries – rea­son­able 2.5 per cent over 2014.

That’s what we pro­duce. What we earn was a dif­fer­ent mat­ter. That went neg­a­tive.

There are a num­ber of mea­sures of what the econ­omy earns, our “na­tional in­come”. They all showed that it was ei­ther flatlin­ing or fall­ing and, given our ris­ing pop­u­la­tion, that meant in­come per Aussie was back to the lev­els of 2012.

True, the loss was pretty mar­ginal, less than 1 per cent. But apart from a brief plunge dur­ing the GFC, it’s es­sen­tially the first time this has hap­pened since the 1990s.

We have now moved from boom into a new, some­what bleaker era.

Ex­actly how bleak it proves to be is up to us. We can’t change the global en­v­i­ron- ment in which we have to op­er­ate but we can change how we deal with it.

One part of that chal­lenge was on dis­play in Joe Hockey’s In­ter­gen­er­a­tional Re­port.

We are get­ting older and that will mean more money will have to be spent on health and so­cial wel­fare.

With the av­er­age life ex­pectancy headed well into the 90s for both men and women, most Aus­tralians will be on the pen­sion for 30 years and more, and ac­cess­ing the health sys­tem, even if just for di­ag­nos­tics, as never be­fore. That’s against the all-but zero who lived long enough when the pen­sion was in­tro­duced more than 100 years ago.

Apart from lift­ing the pen­sion age, which is al­ready hap­pen­ing, but will only knock a cou­ple of years off, the only re­ally ef­fec­tive way of get­ting peo­ple off the pen­sion is if they are fund­ing their old age from su­per­an­nu­a­tion.

That runs smack into calls for the Gov­ern­ment to cut the in­cen­tives for su­per to help get the Bud­get back to sur­plus.

Australia has been on a pros­per­ity roll for nearly a quar­ter of a cen­tury, since we came out of the re­ces­sion of 1990-91.

First, we boosted what we pro­duced, rid­ing the pro­duc­tiv­ity gained from the Hawke-Keat­ing re­form era.

Then from around 1998 our na­tional in­come, what we got from that pro­duc­tion, started in­creas­ing at a higher pace than our out­put. We were get­ting richer.

It re­ally took off as we got into the new cen­tury, as the China boom gath­ered pace.

Then it all got crunched in the GFC but only very briefly, as China went on the mother of all spend­ing binges, with much of that di­rected to­wards us.

That money flowed into Australia via the BHP Bil­li­tons and Rio Tin­tos and then on and into Peter Costello’s bud­gets. He in turn redi­rected some of it back to us via his yearly tax cuts.

Now we’re in the post- boom han­gover stage. Growth is slug­gish and in­come is static or fall­ing.

We are all wait­ing to see some spark on the non-re­sources side of the econ­omy.

This re­al­ity is sink­ing in faster in some parts of Australia more than oth­ers. Queens­land and even more, WA, which rode the boom es­ca­la­tor up, have been slid­ing the most.

NSW and Syd­ney in par­tic­u­lar, and to a lesser ex­tent Mel­bourne, have been rid­ing a prop­erty mar­ket boom which has dis­guised that broader in­come trend

While 2014 can be seen as a sort of tran­si­tion year, this year we re­ally will be into the post­boom era.

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