ECONOMICS GEORDAN MURRAY Acting Principal Economist EXPANDING ECONOMY Achieving 40 years of continuous economic growth. September 2018 marked a decadesince the onset of the GFC. Bystark contrast, it also marked anunprecedented and internationallyworld over, economic growth in Australiaaccelerated to reach a peak annual rateof 4.6 per cent in early 2012. The miningconstruction boom was obviously a criticalapartments which naturally take manymonths to complete. At this stage in late2018 there are also a very large volumeof apartment projects in the pipeline yet to unrivalled 27 years of continuous expansionelement in employment. be commenced. in Australia’s economy. If the consensus of What’s next: the subsequent current forecasts is correct, we’re on track TO THE ENVY OF public sector building boom to achieve 30 years. DEVELOPED ECONOMIES The world is now a very different place Our economic prosperity is underscored since the onset of the GFC. For developed by Australia’s macroeconomic reforms of THE WORLD OVER, economies in particular, consumers are the 1980s and 1990s. The reforms of the ECONOMIC GROWTH IN much more cautious, partly due to real former decade included tariff reform, floatingAUSTRALIA ACCELERATED wages growth remaining persistently weak in of the dollar and the establishment of the TO REACH A PEAK ANNUAL this new, post-GFC era. RBA as the custodian of inflation. The latter While Australia avoided much of the decade saw our governments embark RATE OF 4.6 PER CENT IN calamity, a full recovery in the household on an extensive microeconomic reform EARLY 2012 sector has been somewhat delayed. For agenda through the Hilmer reforms, and the example, Australia’s unemployment rate introduction of GST and budget repair. never soared to the same terrible heights In the immediate wake of the onset of The population boom seen in comparable advanced economies, the GFC, economic growth did grind to a Housing construction had deteriorated but it is yet to grind back down to very slow pace – down to 1.4 per cent per to recessionary levels despite the pre-GFC levels. annum in the September quarter of 2009 aforementioned population boom. From Looking ahead to the prospects of and GDP per capita growth dipped into hindsight and from the perspective of the another decade of economic expansion, negative territory. Unemployment jumped wider economy, this could be (contentiously)we can still expect Australia’s construction to 5.9 per cent in the June quarter of considered as something of a blessing in sector to do much of the heavy lifting. 2009 – largely a result of Australian expatsdisguise. Because, by the time housing As housing construction winds down – returning to the economic safe haven they construction finally did start catch up (fromnotwithstanding the long tail of this housing still called home, alongside the internationalaround late 2013) with population growth, itcycle – state governments are seeking to labour force looking further afield for jobdid so just as the mining investment boom rectify the decades of underinvestment in opportunities that just weren’t available was winding down. transport infrastructure. amidst the prevailing uncertainty across theThe housing boom North Atlantic. Mining construction workers in the west The China boom and in the north headed back to the major Critically in late 2009 and into 2010, population centres in the south-east of the China’s response to the GFC – a massive country to build a record number of much stimulus package of government needed homes that had accumulated as investment into housing, rural infrastructure,pent up demand, again playing a critical role transportation, health and education, in keeping economic growth ticking over and environment, industry, you name it – was keeping a lid on unemployment. starting to take effect. The world’s most Only in late 2017 did housing populous economy was demanding our construction start to pull back materially, resources (coal and iron ore) as their energybut the very nature of housing construction and building needs ramped up. means that this boom will have a much This would span around four years before longer tail than what was experienced of starting to pull back (materially) in late 2013.the preceding mining construction boom. To the envy of developed economies the Much of what has been commenced are BUILDING NEWS ISSUE 5/2018 P7