Treasurer Scott Morrison pays tribute to ‘every Australian’ who has kept the economy growing since 1991

This article is more than 4 years old

This article is more than 4 years old

The Australian economy has completed 25 years without a recession after the national accounts showed that the economy grew 3.3% in the year to June.

The treasurer, Scott Morrison, trumpeted the result and described it as “tribute to every Australian who has gone out there, gone to work, got a job, that is running or has started a business”.

But Wednesday’s figures showed that growth in the June quarter had halved to 0.5% compared with the March quarter, and the Australian Bureau of Statistics said consumer and government spending were propping up other areas of the economy.

“Growth in the June quarter was driven by domestic final demand, which rose 0.6%, supported by ongoing growth in household and public consumption,” the ABS said.



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At a media conference in Canberra, Morrison said public final demand had been boosted by the government listing hepatitis C drugs on the pharmaceutical benefits scheme and the $180m procurement of Chinook helicopters.

Final household consumption grew 0.2% in the June quarter in seasonally adjusted terms.

Morrison said he was particularly concerned about the weakness of household consumption, describing the figure as “well below what we have seen for the last few quarters”.

“It tells us that we have to be very mindful of the sensitivity of the economy in the circumstances that exist globally,” he said.

The shadow treasurer, Chris Bowen, said Labor welcomed the headline result and the record 25 consecutive years of growth. But he said Australians would be “concerned” that the rate of growth had halved and the remainder was “largely the result of government spending”.

Economists noted that Australia’s 100 straight quarters of growth since the last recession ended in 1991 showed that it was closing in on the record 103 consecutive quarters of growth recorded by the Netherlands.

With annual growth at a seasonally adjusted 3.3% in the June quarter, the economy was growing at its fastest in four years, said CommSec’s chief economist, Craig James.

“Annual growth has lifted to four-year highs. Australia has now notched up 100 quarters without a recession,” he said. “The Netherlands holds the record for the longest expansion at 103 quarters. Over the next year Australia should pick up the gold medal for the longest economic expansion of a developed economy.

“Inflation stands at 1%. Interest rates stand at 1.5%. Unemployment stands at 5.7%. The mining construction boom may be over, but it has been replaced by a housing construction boom. There is much to like and celebrate about Australia’s economy.”

The ABS said compensation of employees rose by a modest 0.5% in the June quarter to be 3.1% higher through the year. It follows slow growth in number of hours worked (0.7%) and the wage price index (2.1%).



Morrison said Australia needed incomes to grow, not because of a wages explosion, but “off the basis of improved growth in the economy and improved productivity”.

“We want to see household incomes lift. We want to see company profits lift.”

Asked how the government could help boost incomes, Morrison nominated asset write-offs for small businesses, competition policy, tax cuts, startups and the innovation agenda.

“It is no one thing, it is a product of economic policy which is designed to try and get regulation off the back of business, to have more competitive tax regime to enable them to get ahead.”

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Other features of the accounts included flat investment, where continued reduction in engineering construction in the mining sector was offset by growth in public investment.



The ABS said international trade detracted from growth in the quarter owing to strong growth in imports and a slowing in the rate of growth in exports.



The terms of trade growth of 2.3% in seasonally adjusted terms was the first increase since December 2013, it said.

Asked how the figures would impact the budget, Morrison said he would update the projections in the middle of the financial year, but noted commodity prices were “very consistent with what [they were] at the time of the budget”.

Both revenue growth and expenditure cuts were contributing to the long-term aspiration to balance the budget, he said.

“The percentage of revenue as a share of the economy is projected to increase ... at a greater rate than expenditure as a share of the economy is projected to fall.”



He said this showed revenue growth was contributing to budget repair but it was not doing so due to tax rises.

Morrison said the government could not control some factors contributing to revenue, such as the terms of trade, but could control its expenditure.

He warned that the ratings agencies were not convinced “that this parliament is actually going to support expenditure restraint”.

The Australian dollar slipped slightly on the ABS announcement, falling to US76.56c from a morning high of US76.89c.