(Australian Associated Press)
A flat line in Australian living standards shows a 20-year golden period of strong economic growth is well and truly over.
Australia’s income growth – the key indicator of living standards – has been stagnant since December 2011, compared with about 2.5 per cent growth a year last decade in spite of the global financial crisis, new economic modelling shows.
The data, compiled by the Australian National University’s Centre for Social Research and Methods, raise concern for the country’s future amid fears the housing sector is cooling.
Debt, rather than stronger income streams to households, is fuelling moderate consumption growth, ANU researcher Ben Phillips said.
“Perhaps helped along a little bit by the housing boom in Sydney and Melbourne, consumption is continuing to grow reasonably strongly,” Associate Professor Ben Phillips told AAP.
“You could probably argue that a lot of that comes out of debt financing as there has been strong growth in loans in recent years.”
In the latest ANZ-Roy Morgan survey on consumer confidence on Tuesday, respondents’ views toward their personal finances plunged 5.5 per cent and their near-term economic outlook fell by two per cent.
Meanwhile, retail spending growth slipped to a two-and-a-half-year low in March, pointing to slowing economic momentum in early 2016.
“If you’ve got pretty stagnant income growth and pushing on that is an ageing society, then you’re probably not looking at particularly strong numbers for retail in the future,” Prof Phillips said.
But he said the pullback in incomes should not be surprising given about 20 years of growth.
Welfare group St Vincent de Paul expressed concern many families were actually enduring a decline in living standards despite the figures showing stagnation.
“When households are forced to rely on charitable assistance as the default mode of meeting their weekly expenditure, we seriously have a problem,” chief executive John Falzon said.
He said households that experienced a decline in their incomes had also been hit with rising living costs and slashing of government funding to social services.