But household spending softened through the quarter despite the Morrison government's tax cuts, which started flowing to workers from July, and the Reserve Bank's interest rate reductions to a new record low of 0.75 per cent. Loading The period was marked by extra tax refunds of up to $1080 hitting workers' wallets but the boost did nothing to get consumers into shops. Spending on discretionary goods and services rose by 0.3 per cent, the weakest growth has been since late 2012. Treasurer Josh Frydenberg said the unwillingness of shoppers to spend was a "timing issue".

"If people pay down their debt, then ultimately in the long run, they will have lower interest payments, and that will free up more money to spend across the economy," he said. "It is up to the Australian people whether they choose to save or to spend." He said in the context of global economic challenges such as the trade war between the United States and China, the numbers "underline the economic resilience of the Australian economy" and "the need to stay the course". Treasurer Josh Frydenberg said the unwillingness of shoppers to spend was a "timing issue". Credit:Alex Ellinghausen Dwelling investment fell for the fourth consecutive quarter, down by 1.7 per cent, with overall household spending up by just 0.1 per cent. ABS chief economist Bruce Hockman said the household saving ratio increased to 4.8 per cent as consumers put away their tax cuts for a rainy day.

"The reduction to tax payable did not translate to a rise in discretionary spending, which led to a visible impact to household saving," he said. Mr Frydenberg said whether spent or saved, the tax cuts have "helped put households in a stronger economic position" making them more financially secure with more money in their pocket. GDP per capita was flat, the third quarter in the past five in which it has been static or negative. Compensation of employees, which measures the total wages bill, not individual pay packets, was up by 5 per cent through the year. Company profits were up by 11.1 per cent over the same period of time. Net exports - led by iron ore and LNG - buoyed the economy, mining investment fell by 7.8 per cent in the quarter to be 11.2 per cent. Non-mining business investment was up by 1.2 per cent, driven by non-residential building and road projects.

The bureau said government final consumption expenditure rose 0.9 per cent in the quarter and remained strong throughout the year at 6.0 per cent. National non-defence consumption expenditure contributed to growth with continued spending on disability and aged care services. But the drought continues to have a devastating impact on Australian communities and is hitting the bottom line of the economy. "We have seen farm GDP 5.9 per cent lower through the year to the September quarter, and falling in four of the past five quarters," said Mr Frydenberg. Victoria was the best performing of the states, adding 0.4 per cent in state final demand. NSW added 0.3 per cent over the same period of time.

Victoria saw its softest household consumption in seven years. New buildings picked up most of the growth in the state. In NSW, workers were spending more on essentials than discretionary spending - resulting in subdued overall household consumption growth of just 0.2 percent. Loading Replay Replay video Play video Play video Capital Economics senior economist Marcel Thieliant said the result would put more pressure on the Reserve Bank to cut interest rates next year. He said the 0.1 per cent increase in private consumption was the slowest lift since the global financial crisis and showed the government's tax cuts were not boosting consumers.

"Today's data suggest that the RBA won't remain in wait-and-see mode for much longer. We reiterate our forecast that the Bank will cut rates by 25 basis point in February and April and launch quantitative easing in the second half of next year," he said.