Australians are worse off today than they were three years ago, but Treasurer Jim Chalmers argues they would be mired in even more economic misery under the coalition.
Living standards, measured by real disposable income per capita, has fallen more than 10 per cent since Labor took office in May 2022 as inflation and interest rates have eaten into household savings.
The figures were laid bare in a grim national accounts reading for Dr Chalmers, complicating his job of selling his party as superior economic managers than the opposition ahead of the next election, due by May.
Wednesday’s data from the Australian Bureau of Statistics showed the economy grew at its slowest annual rate since the 1990s recession, outside of the COVID-19 pandemic, at just 0.8 per cent.
Without government spending, the economy would have gone backwards for the quarter.
Dismal productivity growth shows a long-term solution remains out of reach.
Dr Chalmers claimed government cost-of-living measures like energy rebates have helped ease the burden for Australians doing it tough.
“When we came to office, people were already going very substantially backwards,” he told ABC Radio National on Thursday.
“We acknowledge that they’ve got a lot of ground to make up in their household budgets.”
Nationals leader David Littleproud said the government failed to fix the fundamentals behind the sluggish economy, instead throwing money at the problem with measures like energy rebates.
He refused to commit to extending the $300 rebates when they run out mid-2025.
“(Prime Minister) Anthony Albanese slammed our economy into a wall,” he told Channel Nine’s Today Show.
“He’s tried to solve the nation’s problems by spending your money and ultimately he’s going to run out of that and he’s fuelling inflation.”
Dr Chalmers said if the coalition had their way, government spending would be slashed and people be going backwards.
“So the question for people will be, are you going to be better off or worse off if the coalition gets back in, and comes after Medicare and comes after your wages again like they did last time?” Dr Chalmers said.
“Or will you be better off under a Labor government, led by Anthony Albanese, rolling out cost-of-living help and managing the economy responsibly.
“That’ll be one of the big key choices at the election.”
Dr Chalmers stressed there were green shoots for the economy, with workers experiencing real wages growth, unemployment low and inflation coming down, albeit slower than the Reserve Bank would like.
His optimism was echoed by the Organisation for Economic Co-operation and Development, which said Australia’s economic growth prospects were improving.
But the Paris-based organisation warned immigration policies, unexpectedly stubborn services inflation and escalating global trade tensions posed risks.
“Policymakers should beware, in seeking to curb immigration to ease pressures on housing costs, of worsening labour shortages, including in house-building,” the outlook read.
Australia has experienced sharp growth in migration as borders reopened after the pandemic, with both the federal government and opposition proposing or implementing measures to slow new arrivals.
The OECD also warned inflation could stay higher than expected and prolong the wait for interest rate cuts.
In addition, as a small open economy, Australia was exposed to rising global trade tensions and a weaker Chinese economy.
The OECD expects Australia’s weak economy to improve on expectations of interest rate cuts next year as well as improving real wages, income tax cuts and extended energy assistance.
It projects GDP growth to pick up to 1.9 per cent in 2025 and 2.5 per cent in 2026.
