It appears that the figure for Australia’s economic growth we gave in our last issue was much too
optimistic. The figure, taken from the Trading Economics website was 9.5% for the last financial year but the figure now given by the Australian Bureau of Statistics (ABS) for the financial year ended 30 June 2021 is 1.5%. (1) The figure for the calendar year
ended December 2021 is 4.2%. (2) At the same time migration had gone into reverse and Australia had a very low increase in population growth which indicates that the economy can grow without a flood of immigrants.
Nevertheless while net immigration is expected to be only 41,000 in 2021-22 it is expected to rise to 180,000 in 2022-23 and 213,000 a year later. (3) These figures presumably would include refugees and temporary migrants. A figure of 160,000 has been given
for next financial year’s migrant intake and this includes 109,900 skilled migrants at the expense of family reunion migrants. (4)
The Federal Budget that came out in late March
includes a few goodies aimed at stimulating the economy and this includes a $250 handout to anyone on welfare and an additional $420 rebate to low and middle income taxpayers. The petrol tax is to be halved for the next six months. (5) These are not long term
benefits and there is no permanent tax relief for the lowest income levels.
Looking at the broader implications for the economy it’s estimated that this financial year (2021-22)
the government deficit will be $79.8 billion which is expected to fall to $47.1 billion in 2024-25. By then the government’s net debt is expected to be $823.3 billion. The government is optimistic about the economy expecting it to grow by 3.5% in 2022-23
and unemployment, which has recently fallen, to reach 3.75%. (6) No doubt a list of costly infrastructure projects is expected to help create more jobs and these include a $billion to upgrade the railway between Newcastle and Sydney, $1.6 billion for an extension
of the Brisbane to Sunshine Coast rail line and $3.1 billion for the Melbourne Intermodal Terminal Package. (7) A new port is proposed for Darwin.
There is not a great deal in the budget
for families despite the total fertility rate in 2020 falling to 1.58 per woman in 2020. The exception is with housing and an additional $2 billion will go to the National Housing Finance and Investment Corporation which is expected to result in more than
10,000 affordable houses becoming available. Also the number of those to be assisted under the Home Guarantee Scheme will rise to 50,000. The scheme is available to couples with a combined income under $200,000 or singles under $125,000. Home ownership for
Australians under 40 is the lowest since 1947. (8)
Australia seems to be doing better economically than many comparable companies. Our employment levels are rising while those of Japan
and Britain are falling. Our real GDP is also rising while that of Britain, Japan and Germany is going backwards.
No doubt what largesse there was in this budget was influenced by the
fact that a federal election is due shortly. It should also be kept in mind that much of the infrastructure expenditure is only needed because Australia has one of the more generous immigration intakes in the world and one of the highest rates of population
growth in the Western world.
(3) Jacob Greber, “Coalition Misses the Boat on Migration:
Bosses”, Australian Bureau of Statistics, 31 March 2022
(4) Robyn Ironside, “Spots for Skills Put Ahead of Partners”, The Australian, 30 March 2022
(5) Greg Brown, “Annual Returns to Put $420 in Pocket”, The Australian,
30 March 2022
(6) Geoff Chambers, “The Cost of Winning”, The Australian, 30 March 2022
(7) John Ferguson, “Roads, Rail Pave the Way for 40,000 Jobs”, The Australian, 30 March 2022
(8) Natasha Bita, Charlie Pell,
The Australian, 30 March 2022
Both in dollars terms
and as a proportion of our Gross Domestic Product (GDP) Australia’s foreign debt has increased considerably since the mid-1980s. In 1983-84 net foreign debt amounted to $32,492 million or 15.2% of GDP. In 2000-01 debt reached $295,880 million and 41.9%
of GDP. By 2013-14 foreign debt went to $865,462 million or 54.6% of GDP. In the meantime interest on net foreign debt went from $3,412 million in 1983-84 to $23,307 million in 2013-14.
More recent figures show a further increase in net foreign debt. It reached $1,062.5 billion at December 2017 ($1,062,500 million) and then increased by $79.1 billion or 7.44% to reach $1,141.6 billion at December 2018. In 2019 it went up $45.2 billion or
3.96% to reach $1,186.8 billion by the end of that year. The rate of increase tended to slow down in 2020 and 2021 but by December 2021 it had reached $1,204.9 billion.