Australian economy ‘drifting’ despite natural gifts
Australia has the resources it needs for a globally prosperous economy but is failing to convert those assets into meaningful growth, a think tank says.
Advantages include abundant renewable energy, critical minerals, a world-class research sector and ties to the world’s fastest-growing region.
But governments risk being left behind unless they make more ambitious reforms to boost business investment, innovation and economic dynamism.
These were the findings of Australia’s Economic Development Committee’s inaugural State of the Nation report, released on Monday.
“We have a strong hand,” the think tank said.
“But national advantage does not automatically translate into prosperity; it requires a conscious choice.”
The report found Australia’s long-term economic performance has weakened across many key metrics.
Productivity growth, business investment and competitiveness have either decreased or declined; housing affordability and disadvantage were worsening.
“The verdict: Australia is not moving fast enough and we are adrift on too many fronts,” he said.
Progress has been made in reducing emissions and introducing renewable energies, but implementation is very slow and AI adoption lags behind peer countries.
CEDA argued that capitalizing on these two opportunities is critical to Australia’s long-term economic and social well-being.
While job entry rates have fallen from 15.1 percent to 10.7 percent over two decades, productivity growth and non-mining investment remain very low.
The report comes ahead of the release of the budgets of two of Australia’s state economic powers, NSW and Queensland, on Tuesday.
After years of consecutive operating deficits, the NSW budget is set to remain in the red.
A slowing property market will also hit government coffers, with an estimated $5 billion drop in stamp duty revenue over four years.
A legacy of overspending, volatile revenues and excessive infrastructure costs are the biggest challenges for the Queensland budget, according to e61 Institute analysis.
“The government also wants to maintain services, avoid tax increases and bring public debt to more sustainable levels,” CEO Michael Brennan said.
“Achieving all this is alarming.”
The CEDA report also pointed to increasing pressures on the country’s social contract.
Housing affordability is worsening, while poverty and demand for health and care services are increasing with an aging population.
Median home values currently stand at 9.9 times the median income, while rental vacancy rates remain well below levels considered healthy.
Despite the headwinds, Australia remains well placed to succeed as long as policymakers embrace business and tackle social challenges.
“Australia has what it takes to succeed,” said CEDA CEO Melinda Cilento.
“But success requires ambition and clear priorities, frank discussion, deliberate choices, and a willingness to take action.”
