Australia's record of 26 years without a recession flatters to deceive. The gaudy numbers mask serious flaws in the country's economic model.

First and most obviously, the Australian economy is still far too dependent on "houses and holes." During part of the typical business cycle, national income and prosperity are driven by exports of commodities -- primarily iron ore, liquefied natural gas and coal -- that come out of holes in the ground. At other times, low interest rates and easy credit boost house prices, propping up economic activity. These two forces have combined with one of the highest population growth rates in the developed world (around 1.5 per cent annually, driven mostly by immigration) to prop up headline growth.

Yet a significant portion of housing activity is speculative. Going by measures such as price-to-rent or price-to-disposable income, Australia's property market looks substantially overvalued.

Meanwhile, GDP per capita has been largely stagnant since 2008. Australia's manufacturing industry, once a significant employer and an important part of the economy, has increasingly been hollowed out. The country's cost structure is high. Improvements in productivity have, as elsewhere, been lacklustre. Infrastructure is aging and unable to cope with the demands of a rising population, especially in major cities. Australia stands at 21st place in the 2017 Global Competitiveness Report. It ranks 15th in the World Bank's ease of doing business list.