Australian Economy

Australia’s declining economic growth is mostly just POPULATION growth (immigration) – the lazy option instead of deep reforms to boost investment & PRODUCTIVITY

Yesterday’s national accounts confirm a disturbing reality for Australia: immigration-led population growth but flat-lined living standards.   Australia’s economic growth has been increasingly reliant on POPULATION growth rather than PRODUCTIVITY growth. Productivity growth (and overall economic growth) have been in steady DECLINE in Australia for several decades through ALL governments. The problem is that all sides of politics are now bowing to populist pressure to radically reduce immigration, which has been the primary source of economic growth this century. This lower growth future will challenge Australian investors’ long-held assumptions of steadily rising corporate revenues, profits and dividends that have been based primarily on high immigration.&

Wages falling further behind inflation – government and RBA stoking, not attacking, inflation

So far this century, wages in Australia have grown comfortably AHEAD of inflation, with public sector wage growth leading private sector wage growth. However, since the start of 2020 in the post-Covid era of higher inflation, wages have LAGGED well behind inflation, with both private and public sectors suffering NEGATIVE real wage growth. The gap between inflation and wages has accelerated once again over the past year as inflation remains high. Here I look at the causes and solutions for the problems of declining real wages and living standards.

Australian inflation well ABOVE target once again. Here’s how I rate the RBA’s record on inflation targeting

Yesterday, Australian CPI inflation came in at 3.8% for the 12 months to June 2026. Down from 4.6% in March, but still well above the RBA’s 2-3% target. ‘Trimmed mean’ CPI is also still well above target at 3.6%. Despite inflation remaining too high, real rates still too low, and Federal & State governments continuing on unconstrained inflationary deficit spending sprees, the RBA is reluctant to raise rates further, fearing the government will once again neutralise the rate hikes with even more ‘cost of living’ handouts and productivity-free wage rises which entrench the inflation spiral. Has this tarnished the RBA’s long-term record on inflation targeting? Here is an update on my 6 Feb 2026 article on the RBA’s long-term record on inflation.

Pre-budget quick quiz - Which side has a better record on Fiscal Responsibility: Labor -v- Libs?

Since Federation: ‘Right’ governments have run surpluses more often than ‘Left’ governments. But ‘Timing is everything! - the Left happened to be in power during the big build-ups of deficits and debts in the two World Wars, when the spending was bi-partisan. In the post-WW2 era: Left wins. The Left have also run larger deficits on average than the Right, but post-WW2 the average deficits have been the same for both sides. My verdict - Equal points to Left and Right since Federation. But equally POOR scores for both sides post-GFC. Both sides should have used windfall revenue gains to put our national fiscal house in order to be better prepared for global cha

Why are Australian cash rates HIGHEST in the world? Five simple reasons.

This is one of the most common investor questions I receive from advisers, and it is one of the easiest to answer. It’s fairly simple. Australians suffer the highest cash rates amongst their rich country peers (chart A) because Australia has: The highest inflation rate (chart B), The highest medium-long-term inflation expectations ie highest treasury yields (C), The highest central bank inflation target (D) – for no good reason at all, The strongest jobs market eg lowest unemployment rate (E) (apart from Japan which has a declining population and workforce), and The loosest / most undisciplined monetary and fiscal policies during and since Covid. Bottom line = locked-in structurally higher inflation

Open Letter to Albo in Singapore begging for fuel

While you are in Singapore perhaps you should ask your hosts why Australia, the most RESOURCE RICH country on earth and a NET EXPORTER of fossil fuels/energy, has to beg for essential liquid fuels from Singapore, a country with ZERO oil or gas of its own, Zero mineral resources, Zero raw materials for industry, and has to IMPORT EVERYTHING from food, fuel, minerals, metals, manufacturing inputs, building materials, and even has to import drinking water for its citizens? 'Self-Reliance' is NOT about 'Made at Home'. It’s about doing the BEST with what you HAVE. 

Wages Growth -v- Inflation: Are wages lagging inflation, or driving it? Public -v- Private sector?

There has been much media commentary around public sector wages driving inflation. Here are the facts.  It is true that public sector wages growth is currently running head of the private sector, but only this year.  In the prior 4 years, public sector wages lagged the private sector. Over the past 10 years, wages in both public and private sectors have lagged inflation by similar margins. Both are yet to catch up to the 2021-3 inflation surge.  Prior to Covid, public and private sector wages both grew well AHEAD of inflation, with public beating private.  Productivity matters! In previous decades, we had rising real wages plus declining inflation, thanks to productivity gains.  But in the current era of zero productivity gains, wage growth ahead of inflation is likely to keep upward pressure on inflation and

RBA Dep Gov opens keynote speech on trade war impacts on Australia with another of my charts!

On 22 May, RBA Deputy Governor Andrew Hauser gave a keynote address outlining his observations from his trip to China in the middle of April, days after Trump launched his 'Liberation Day' tariff war on the world, aimed primarily at China.  As China is by far our largest export buyer, it is our largest source of export and tax revenues, and has been the largest single source of wealth and prosperity for Australians so far this century, he was keen to assess first-hand the likely flow-on effects of the trade war on the Australian economy, and the RBA's monetary policy thinking. The Dep Gov needed a killer chart to open his address, and I am once again incredibly honoured that he contacted me for permission to use another of my charts!

Labor -v- Libs: which side has been better for the Aussie share market?

Looking at share market returns under every PM and government since Federation - right-leaning governments win, with significantly higher average returns than left-leaning governments. Left-leaning PMs presided over the worst return periods for the share market, and also the best return periods. However, most of the big differences are due to lucky (or unlucky) timing, and/or delayed causation from prior governments. Our governments on both sides deserve credit for creating favourable conditions for investment. 

Company insolvencies highest in 35 years - and we’re not even in ‘recession’ yet!

Company insolvencies in Australia have soared back to levels not seen since the deep 1990-1 recession. Business is doing it tough - on recession footing already. But the rapidly expanding government sector is doing fine - accounting for almost all of the growth in jobs and economic 'activity' (and artificially suppressing inflation and unemployment numbers), while businesses suffer. 

Labor -v- Libs: which side has a better record on Deficits & Debts? Here are the facts

'Left' governments have run deficits more often than 'Right' governments, and the Left have also run larger deficits on average than the Right. But timing is everything! - the Left happened to be in power during the big deficits and debts in the two World Wars, when spending was bi-partisan. My verdict? - Equal points to Left and Right - but poor scores for both post-GFC. Both sides could have used windfall revenue gains to put our house in order to better prepare for global challenges, rather than increase spending and debt.

What drives the Aussie Dollar? -Part 3: the long-term inflation effect. Where is it heading?

Exchange rates are driven ultimately by differences in inflation.  Inflation transcends and defeats all attempts to peg, fix, or manage currencies.  Why the Aussie dollar has been in long-term decline against the US dollar for more than a century.  Why I am bullish that this long-term decline is probably behind us. 

Big changes in the world since Trump 1.0 – Part 1: Shape & distribution of Economic Growth

In the 8 years since the start of Trump’s first term, the global economy has changed fundamentally. Part 1 looks at big changes in the shape and distribution of economic growth: There are 600 million more people in the world. That's more than the entire 19th century! Populations are aging everywhere. The global economic pie is US$10 trillion larger. 

5 Reasons the RBA is not cutting rates like the rest of the world - Why I'd rather NOT see rate cuts

Several other countries are into their second rate cut already - why hasn't the RBA cut rates yet? Here are 5 fact-based reasons When will we get rate cuts here? Why I am NOT looking foward to rate cuts!

Australia’s big banks: Origin of the Species, or ‘Survival of the Fattest!’

Ever wondered where our big dinosaur banks came from, and how they got so big? And why they are all virtually the same? How Australia became the richest country in the world per capita - without a central bank, without a national currency, and without bank regulation?   How the dozens of small, independent, competitive banks became the big-4 government protected oligopoly we have today?

Labor’s attempt to nationalise all banks in Australia!

Australians have always had a love-hate relationship with their banks. (OK, so it’s mostly hate). But it was not always the case. Believe it or not, there was a time when the Australian public loved their banks so much they kicked out a Federal government that was trying to close the banks down! Here is the remarkable story of Banks -v- Politics, Capitalism -v- Socialism right here in Australia.

Geopolitics case study - China: largest export customer + potential military threat - a problem?

Our largest export customer and source of wealth & prosperity - also a potential military threat - is this a problem? My answer is no, but for reasons you may not expect. Here is why I am bullish on Australia’s continued resource-based prosperity as global tensions escalate.  Australians have been masters at turning geopolitical shifts and crises into economic advantage!

RBA Deputy Governor opens speech with my chart!

A bit chuffed this week. RBA Dep Gov opened his keynote speech at a major economic forum - with one of my charts. What does he see as Australia's three main sources of wealth and prosperity (and why they matter in future)? How does he see monetary policy being managed in future? What are his observations on Australia - as a 'Stranger in Paradise'?

The Debt Olympics - How do we rate?

Australia and Australians loaded up on debt in the GFC and again in Covid, but how do we stack up against other countries? How do we rate on: Government debt? Corporate debt? Household debt?   Is debt good or bad? When does it become a problem? The answers are probably very different to what you may have thought.

March 2024 Snapshot - Shares keep rising despite strong economy + sticky inflation

March 2024 snapshot – Fed + RBA warn inflation not yet contained, but shares keep surging Here is my essential 1-page snapshot for Aussie investors – What is happening in local and global investment markets and Why.

Company insolvencies up 100%! - 3 reasons not to panic

Yes, company failures are up 100% - but here are three reasons not to panic Insolvency rates tell us about the Business Cycle - Where are we now? Where to next? Which industries are under most pressure? Why the next recession will see fewer company failures than past recessions Why I'm bullish on Aussie companies as a whole, recession or not

Australia's shrinking growth - mostly just population growth

Australia’s economic growth has been increasingly reliant on population rather than real reforms to improve productivity and living standards. It has been deteriorating for several decades through governments of all types. Here is the Big Picture you will not find anywhere else.

Feb 2024 Snapshot - early rate cut hopes dashed but shares surge on confidence from US profits

He's my quick wrap-up of key developments in investment markets in Feb 2024.

Australia's 'Misery Index': Inflation + Unemployment

  Australia's Misery Index: Unemployment + Inflation. Where are we now?

Case Study: JB-Hi-Fi: Misunderstood growth star, or the next Myer?

JB Hi-Fi: Misunderstood growth star or the next Myer?

January 2024 snapshot - shares climb on hopes of early rate cuts as inflation falls

January 2024 snapshot - shares climb on hopes of early rate cuts as inflation falls.  Essential 1-page snapshot for Aussie investors – covering Australian and US share markets, short- and long-term interest rates, inflation, and exchange rate.

Australia's remarkable population-led growth

Australia’s population just hit 27 million, 18 years sooner than planned.  Australia has the highest population growth rate outside of Africa, but it is still the sparsest country on earth. 

Reflections on Australia - lucky country for investors!

In Australia we tend to take a lot for granted. Australia is the richest country in the world per capita (a record we have held since 1890) - but why? It's not just resource riches and/or British colonisation - there are plenty of resource-rich countries, and plenty of ex-British colonies that are economic basket cases today.  How I personally got lucky - twice - in the great lottery of life.

What drives the Aussie dollar? – Part 1: Interest Rate Differentials

Every day (in fact every minute of every day and night) the value of the Aussie dollar jumps around, seemingly at random.

Why do share markets crash? – Part B: Update on Australia

The simple answer is that the Australian share market crashes (and rebounds) because, and when, the US market does. The US is the largest and most influential market that affects all global markets, asset classes, and investors. What happens on our local market is almost always driven by what happens on Wall Street (with rare exceptions like 1907 and 1951), regardless of local conditions, events, or pricing.