Today's National Accounts confirm that growth in the Australian economy continues to be positive but weak.
Our economy is growing but very slowly, weighed down by interest rates, cost of living pressures and global uncertainty.
Growth at 0.3 per cent in the September quarter and 0.8 per cent through the year is below historical averages and below market expectations.
Today's release shows growth is below what most economists expected, demonstrating that demand is weaker, not stronger than most economists forecast.
The most important and most encouraging aspect of today's data is the growth in real incomes, reflecting the combination of moderating inflation, solid wages growth and the Government's cost of living tax cuts.
On a per capita basis, real gross disposable income rose 0.2 per cent in the quarter. When we came to office it was going backwards by 1.6 per cent.
Our policies are designed to help Australians earn more and keep more of what they earn, and while we have more work to do, the data shows we are making progress.
Australians would be much worse off and growth would be even weaker without our responsible approach to the Budget and our cost‑of‑living support.
The Government has maintained a primary focus on the fight against inflation and helping people with the cost of living without ignoring the serious risks to growth.
Today's data confirms the substantial progress we have made in the fight against inflation. The National Accounts measure of prices moderated to be half its peak at 3.6 per cent, the lowest in almost three years. The moderation in inflation contributed 0.3 of percentage point to real income per capita growth in the quarter.
Growth in real incomes was also driven by solid wages growth. The Government's support for wage rises and continuing jobs growth has seen compensation of employees grow 1.4 per cent in the quarter to be 5.4 per cent higher through the year. Growth in compensation of employees contributed 1.1 percentage points to real income per capita growth.
Average growth in compensation of employees has been 60 per cent stronger than under our predecessors. The rise in employee compensation has seen the labour share of income rise to 53.5 per cent, up from 49.3 per cent at the time of the election.
The Government's tax cuts drove a $3.4 billion fall in income tax payable in the quarter. Income taxes fell 3.8 per cent in the quarter, contributing 0.8 of a percentage point to real income per capita growth.
New public final demand growth contributed 0.6 of a percentage point to growth in the quarter.
Most of this was state spending, and the biggest part of the Commonwealth's share was defence spending. State and local spending represented 60 per cent of public demand growth in the quarter. There was also some support from our responsible cost‑of‑living relief and demand‑driven spending on services that Australians rely on like the NDIS and aged care.
Weak consumption still explains much of the softness in the broader economy.
Household consumption has barely moved for the better part of 2024, did not grow in this quarter and only grew by 0.4 per cent through the year.
Households are restraining their spending, with discretionary consumption falling 1.1 per cent through the year. This is unsurprising given interest costs have tripled since rates started rising before the election.
The effect of the energy rebates is to shift consumption from households to government. Treasury estimates that without the impact of energy rebates, household consumption growth would still have been subdued in the quarter.
Restrained household spending and the increase in real incomes helped by our tax cuts have seen Australians rebuild savings in the quarter. The household saving ratio rose to 3.2 per cent from 2.4 per cent.
In addition to higher real disposable incomes, today's data shows encouraging progress when it comes to investment in housing and key components of business investment more broadly - two long‑standing economic challenges that we are focused on.
Dwelling investment grew 1.2 per cent in the quarter. The level of investment in new homes grew 1.7 per cent in the quarter and is 6.8 per cent higher than at the time of the election.
Non‑mining business investment continues to grow and is now at a record high, in part reflecting investment in data centres and renewable energy. While overall business investment fell in the quarter, this reflects the completion of large mining projects.
Global uncertainty and weakness in the Chinese economy contributed to falling iron ore and metallurgical coal exports in the quarter. Overall net exports made 0.1 of a percentage point contribution to growth in the quarter. A large share of these exports were drawn from inventories, which detracted 0.4 of a percentage point from growth.
We've been planning and preparing for a soft landing, and with the economy still growing, inflation back in the band, unemployment in the 4s and more than a million new jobs created, we are on track for one.
Over the past 18 months, around three quarters of OECD economies have recorded at least one negative quarter, while the Australian economy has continued to grow.
We know even with the progress we've made in the national data, that doesn't always translate to how people are faring and feeling in the economy.
Australians are still doing it tough and this is why our responsible economic management is so important - fighting inflation, easing the cost of living and getting the budget in much better nick than what we inherited.
If the Coalition were in charge and had implemented their reckless approach to slash and burn in the budget, incomes would be much weaker and growth would be non‑existent.
Today's data is another demonstration that our balanced approach is the right strategy for Australians and the Australian economy given the risks and challenges we face.
