Australia is on track for its feeblest decade of living standards growth in more than 100 years, as support grows for One Nation and pressure builds for deep policy change.
GDP per person has increased only about 4% so far this decade, putting the 2020s on course to be the worst period for living standards since the 1910s.
Years of lacklustre productivity gains have collided with the COVID-19 shock, the energy crunch linked to Russia’s invasion of Ukraine and a burst of high inflation.
Those forces are eroding real incomes and confidence that the economy can deliver rising prosperity.
Economic data released through July show Australia slipping behind its peers on both inflation and wage outcomes, sharpening concerns about a structural productivity drag.
The OECD reported that Australian real wages have fallen by about 5% over the past five years, one of the steepest declines among its 38 member economies.
That drop means pay packets are buying significantly less, even when nominal wages are rising.
Analysts point to this combination of weak productivity, soft real wages and sticky prices as a key driver of voter frustration and rising appeal for protest parties.
Former Reserve Bank leadership has responded by urging fundamental changes to the policy mix, arguing that small, incremental tweaks are no longer sufficient to turn the trend.
Calls focus on measures that would lift business investment, improve the economy’s productive capacity and better shield households from future global shocks.
The persistent slide in living standards growth, and the lack of clear signs of a turnaround, is being described by senior policymakers as sobering.
