Today’s National Accounts figures show the economy grinding to a halt and highlight the need for the Government to urgently address weak productivity and declining international competitiveness.
Government spending and record high commodity prices have propped up the December quarter result, showing the economy expanding by just 0.2 per cent and 1.5 per cent year on year, highlighting the economy is going backwards in per capita terms given population growth of more than 2.5 per cent.
The result also highlights households are tightening the purse strings in response to rising cost of living pressures, which systemically are being caused by inflation.
Business Council of Australia chief executive Bran Black said the economy over 2023 has weakened, which is also evident in continuing low business confidence.
“Businesses across Australia have made it clear that conditions are worsening, particularly in sectors such as manufacturing, accommodation and food services.
“While productivity rose over the quarter, we are still well off the Reserve Bank’s assumption of 1.5 per cent. In annual terms, productivity has fallen 0.4 per cent year-on-year.”
The data also shows consumption in the most populous state New South Wales is falling.
Mr Black also highlighted the figures fuelled the need for the Commonwealth to address the ongoing threat of investment capital leaving Australian shores, which will impact the nation’s future growth prospects.
The BCA in its Federal Budget submission has called for strong action on addressing cumbersome red tape and regulation issues that are leading to Australia being a less attractive place to invest.
“This isn’t just a concern for business – Australian quality of life is at stake when we start losing out to other nations, because our capacity to afford the future we all want is reduced,” Mr Black said.
“We’ve dropped in global competitiveness rankings from fourth in 2004 to 19th in 2023, which is a concerning decline, and due in large part to excessive overregulation to the point that some investors don’t want to come here while other nations are rolling out the red carpet for them.”
“To be more productive, we need to compete harder and win more investment on the global stage, where we have disappointingly been a net exporter of capital since 2019 – this shouldn’t be the case for a growing country like ours.”
The BCA’s full pre-budget submission can be read here.
