Political leaders now have even more impetus to address economic concerns, after latest GDP figures revealed that the Australian economy barely grew at all last quarter.
According to the Australian Bureau of Statistics (ABS), the country posted GDP growth in the December quarter of just 0.2 of a percentage point in seasonally adjusted terms. That saw year-on-year growth come in at 2.3 per cent.
“Growth in the economy was subdued, reflecting soft household spending and a decline in dwelling investment. The approvals for dwelling construction indicate that the decline in dwelling investment will continue,” the bureau’s chief economist, Bruce Hockman, said.
Household spending remained weak, but posted growth of 0.4 of a percentage point. But private investment, led by the housing downturn, proved to be a major drag on the wider economy.
Investment in dwellings fell by 3.4 per cent, with the value of construction industry output down by 1.9 per cent, with related industries also contracting.
The value added by professional scientific and technical industries also declined — the first time it had done so for three years, the ABS said.
Mining investment was also negative, although that was deemed to reflect the transition from construction to production phases for many mining projects, with oil and gas production surging by 7.7 per cent.
Exports were also down, cutting 0.2 of a percentage point from GDP growth.
State and local government investment helped to prop up the country, growing by 6.3 per cent, led by spending on health, aged care and disability services.
As a result, the ABS said that the healthcare industry remains Australia’s economic powerhouse and the largest contributor to growth.
Compensation of employees rose by 0.9 of a percentage point in the quarter.
‘Politicians must do more to boost growth’
A swathe of business and industry groups seized on the sluggish GDP figures to call on both sides of politics to do more to support the economy.
“Australians are rightly crying out for wages growth, but we can’t deliver that with an economy standing still,” said Business Council of Australia chief executive Jennifer Westacott.
“These numbers should be a wake-up call; to grow wages and create new jobs, we need a plan that gets the economy moving again.
She called for a “comprehensive plan” to help the economy, and with it wages, increase in a sustainable way.
“GDP growth of just 0.2 [of a percentage point] last quarter and 2.3 per cent through the year is simply too low to create the new jobs and growing wages Australians have come to expect over the last two decades,” Ms Westacott said.
“Employers are ready to invest in new jobs and higher wages, but we can only deliver on that potential if Australia gets the settings right to boost growth and investment.”
The Australian Chamber of Commerce and Industry called for “sound budget action” from the federal government, with bipartisan support from opposition parties, to turn around the “disappointing” result.
“It is even weaker than the Reserve Bank’s recently downgraded economic forecasts,” its CEO, James Pearson, said.
“The April 2 federal budget must lay out economy-building policies to ensure businesses keep growing and are in a position to continue to employ more Australians.
“Both sides of politics must take a hard look at their respective policy agendas in the run-up to the May election and focus on what is good for Australia as a whole.
“That means effective policies on taxation, energy, skills and workplace relations.”
Mr Pearson added: “As election day approaches, it is hard to shift the focus off the political issues, but these GDP figures show the need for both parties to commit to policies which recognise the central role of businesses in creating wealth and jobs, and which will lead to stronger economic growth.”
Meanwhile, the Housing Industry Association’s Geordan Murray noted that “the decline in expenditure on residential building became a stronger headwind for economic growth” in the December quarter, and with residential building expected to continue falling from the highs reached in recent years, “an orderly downturn will be dependent on the resilience of the broader economy”.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.