WHY AUSTRALIAN GDP LANGUISHES

Data from the Australian Bureau of Statistics (ABS) reveals that Australia’s GDP per capita has grown by 4.0% between the end of 2019 and mid-2026. This stagnation has put Australia on track for its weakest decade of living standards growth since World War I.

I’ve argued here that Australians can’t have both the highest per capita land prices in the world (which we have!) and a decent GDP growth per head. In fact, apart from a brief increase in 2025 we’ve been in virtual per capita recession since 2023.

Resulting from tax policy favoring property speculation over productivity, Australian GDP growth has gradually tanked since 1974 (arguably the peak of the K-Wave). That would also be confirmed by extending the chart below from 2019 as abovementioned.

Oh, well, that’s a case in which not too many people are interested, unfortunately.

THE ALP’S 50TH NATIONAL CONFERENCE TOMORROW

The ALP National Conference starting in Adelaide tomorrow shows little sign of addressing the looming economic collapse.

Economic Warning Signs

The warning signs of a major financial crisis are already here:

  • Bursting property bubble
  • Skyrocketing living costs
  • Plunging government popularity

Historical Precedents

Australian political history shows that economic downturns consistently destroy governments.

  • 1975: Voters rejected the Whitlam government due to the brutal 1974 recession, which was triggered by a global property crash.
  • 1991: Paul Keating successfully ousted Bob Hawke as Prime Minister during a severe real estate collapse.
  • 2007: John Howard lost office as rising cost-of-living pressures peaked just before the property-led Global Financial Crisis.

The Current Reality

Given this history, it is remarkably strange that countering next year’s financial collapse is not the top priority for the ALP’s 50th national conference.

We ignore history at our peril.

PRODUCTIVE V. EXTRACTIVE INCOMES

Dr Gavin Putland published a research paper for Prosper Australia in 2019 entitled “Trickle-Up Economics: Assessing the impact of privatized land rent on economic growth.“

The paper noted the following: –

  1. The economic rent of land (rental value plus smoothed realized “capital gains”) has increased from 2% of GDP in the early 1950s to more than 20% of GDP in 2017.
  2. The “Global Financial Crisis” and the recession of the early 1990s were preceded by notable squeezes on the percentage of GDP accruing to labour and capital, as distinct from land.
  3. An increase in land rent of 1% of GDP corresponds to a loss of 0.124% per annum in GDP growth.
  4. According to these correlations, the gains of landowners do not “trickle down” to labour and capital. On the contrary, there is a “trickle-up” effect: when labour and capital get a greater fraction of GDP, growth is faster, and the cumulative effect of that growth will eventually make landowners better off in absolute terms, although not in relative terms.
  5. Since 2003, the economic rent of land has consistently exceeded 15% of GDP. The extraction of this economic rent, no less than the extraction of taxes, is a drain on the capacity of workers and employers to invest in future growth.
  6. Taxes that improve the competitive position of tenants and land buyers relative to landlords and sellers — such as land-value taxes, and vacancy taxes (applicable to both bare land and vacant accommodation) — have negative deadweight.
  7. In order to maximize growth, we must minimize rent extraction by maximizing the bargaining power of labour and capital relative to land.

Therefore, if we examine the chart above, had we captured only the land rent (shown dark blue) publicly, extractive taxation (red) and capital gains (green) would then become available to both labour and capital (pale blue) as additional income, and unavailable to rent seeking interests only.

Surely, an admirable aim?