When economists talk about economic growth, they generally refer to gross domestic product (GDP). This is supposed to reflect the total value of all goods and services produced within a nation or a state. And it does that reasonably well.
What it does not do well is reflect how that growth is achieved. Or even whether high GDP growth improves the wellbeing (incomes) of the average resident.
Most often in Australia, you’ll find that high economic growth is largely the result of rapid population growth. Yet despite a ballooning population over the past 10 years, Australia has seen virtually no wage growth in that time.
Then there’s Tasmania, a state that has been lagging behind its faster growing neighbours. Until now…
High economic growth isn’t always a good thing
Tasmania’s economy recorded its fastest growth in a decade in 2017/18, according to Tasmanian Chamber of Commerce and Industry’s 2018 report.
As the AAP notes, this puts Tassie’s growth above the national average.
Prominent economist Saul Eslake released the 2018 report on Monday. It shows the state’s economy grew by 3.3% last financial year.
That sounds good.
But the report also notes that the state’s population grew at the fastest pace in nine years. This means adding more people is one of the key drivers of that growth. And it means that GDP per capita — how the average person’s wealth may have grown — is far lower than 3.3%.
Something to keep in mind when our pollies stand on their soapboxes and tout the high economic growth levels they’ve ushered in. The ugly truth is it’s almost always delivered with a new surge in population growth.
PS: The tax burden on Australians has grown by leaps and bounds in our lifetime, and shows little sign of reversing. You may think you know who’s responsible for rising taxes. But as we reveal in our free new report — ‘What you could do to stop Australia’s Tax Freedom Day from blowing out even further in 2018’ — you may have it all wrong…Click here for more.