NSW Treasurer Dominic Perrottet said the downturn in the housing market has obviously had a flow-on effect. Credit:AAP "Volumes are still low but we are starting to see signs of a stabilisation in house prices which will give people more confidence, as will surety around key economic policies with the re-election of the Morrison government. "Importantly our record $93 billion investment in new infrastructure across NSW has been a source of strength to the economy and helped lift public sector demand, which was up 5.6 per cent across the year." Despite the economic slump, the Morrison government is now on the brink of delivering the first budget surplus in a decade as it called on the states to fast-track infrastructure spending. Declaring there had been a "major improvement" since the budget, Treasurer Josh Frydenberg accused economists and Labor of talking down the economy after national accounts figures showed economic growth had fallen to 1.44 per cent over the past financial year.

With the budget originally forecast to be in deficit by $14.5 billion, surging commodity prices have flooded government coffers and a surplus for the 2018-19 financial year now expected to be confirmed when budget numbers are released by the end of September. Loading With interest rates at historic lows, the Reserve Bank has spent months urging the government to borrow and spend more to lift economic growth, drive down unemployment and boost wages. The overall GDP figure, up to a third of the long-run average of between 3 and 4 per cent, has delivered Australia its 29th year of unbroken economic growth. It is the second worst financial year result since the 1991 recession, narrowly ahead of 2002-03 when growth was 1.43 per cent.

Mr Frydenberg said "we are in a new world" with "low interest rates, relatively low unemployment and low inflation." The Treasurer said Prime Minister Scott Morrison had written to state premiers about the possibility of bringing forward some infrastructure projects which could provide a boost to the economy. "I want to emphasise that Germany, the United Kingdom, Sweden, Singapore and others experienced negative growth in the June quarter," he said. Prime Minister Scott Morrison and Treasurer Josh Frydenberg. Credit:Alex Ellinghausen "The Australian economy has shown remarkable resilience, and these numbers are a repudiation of all those who have sought to talk down the economy."

Shadow treasurer Jim Chalmers said the government should bring forward its mid-year budget update from December to get the economy out of its rut. "If the Treasurer thinks that these weak economic growth numbers are good, then he's even more out of touch than we feared," he said Wednesday's figures showed the household saving ratio fell to its lowest level since December 2007, in a sign consumers are saving less to make ends meet. That's despite overall consumer spending slowing. New car sales were down 10.1 per cent compared to August last year, with each segment of the market recording a downturn as consumers increasingly avoid expensive purchases.

The figures, released separately by the Federal Chamber of Automotive Industries on Wednesday, show sales of passenger vehicles dropped by 16.7 per cent and SUVs by 5.4 per cent. "There is no doubt it is a very tough market at the moment," FCAI chief executive Tony Weber said. Despite the fall, nominal GDP – which feeds directly into the budget – was above expectations with the surge in key commodities set to feed extra cash to the government bottom line. The boost may be short-lived with iron ore prices down sharply since the June quarter. Amid a bleak international outlook due to the ongoing US-China trade war, mining and international trade were one of the few positives for the economy.

Mining added 0.3 percentage points to the overall 0.5 per cent quarterly result with other support coming from the health and public sector. The manufacturing, construction and wholesale trade sectors cut growth. The figures highlight the risk of any further deterioration in the global economy with domestic household consumption creeping along by 0.2 per cent due to persistently low wage growth. Loading The economy would have struggled to stay out of recession without historically high levels of immigration, with economic growth per person – gross domestic product per capita – negative over the past 12 months, the worst performance since 2008-2009. Ernst and Young chief economist Jo Masters said while the national accounts show an economy still expanding, the pace of growth is slowing and the economy has "lost significant momentum" in the past year.