What’s Australia’s economic story?

A pre-federal Budget reflection from our Executive Director

Thirty years ago, the hottest ticket in town was Oasis. (What’s the story) Morning Glory? became the album of the era and Wonderwall topped the 1995 Hottest 100.

Oasis tours Australia later this year and tickets are like gold dust. Inevitably, the hype around the tour will cause many of us to compare life as it is now and life as it was then.

That’s the task for the Government and Opposition for the Federal Budget and Budget-in-Reply this week, except they’ll present different tracks on Australia’s economic story now and as it ought to be in the future. Expect a mix of Champagne Supernova and Don’t Look Back in Anger themes.

Looking back to 1995, it was a mixed story. GDP growth was 4.75%, unemployment was 8.3%, underlying inflation was 2.5%, and interest rates were 10.5%. Geopolitically, it was a much simpler time: so ascendent were the United States and the liberal democratic order that in 1992 Francis Fukuyama had published The End of History. In 1995 the world’s economy was opening up. Now it’s going in the opposite direction.

These days, the macro numbers are better overall but the sense of crisis is more acute. GDP growth is 3.4%, unemployment is 4.1%, underlying inflation is 3.2%, and interest rates are 4.1%. We have agreed decarbonisation is a precondition for growth, but have just passed through a global pandemic and the highest inflationary environment since 1990. What’s more, the United States, our closest ally and the world’s preeminent power, has decided to escalate trade wars across the globe.

These geopolitical forces make the answer to the question of what Australia’s economic story is, and what it should be, even more important.

Jim Chalmers refers to these forces when he speaks of “churn and change” and wanting communities to be beneficiaries and not victims of these changes. He has written how democracies like Australia “will prevail if we rely on their inbuilt strengths, and the ethical and practical incentives for leaders to govern in ways that improve the lives of the people.”

Angus Taylor has also drawn on the international context to speak of “a future where fairness, opportunity, enterprise and prosperity are within reach for all Australians.” The “essence of the Australian story”, Taylor said in February, is “a country where people can strive, take risks, and build a better future. Where they have the confidence to pick themselves up and persevere.”

What is striking about the sentiments of our economic leaders is how aligned they are on investing in the confidence and capability of people in Australia, and the core task for government of improving people’s lives.

Working alongside communities and empowering people to live the lives they aspire to is something community services like BSL strive to do every day. Attitudes research has shown us this is a core expectation Australians have of our democracy.

The stories we hear, however, suggest trust in Australia’s story is fraying.

Cascading crises at home and abroad have made the past few years difficult for everyone, especially those with the fewest resources. Two statistics bear this out: our median house price to income ratio is more than double what it was in 1995, and Australia’s unofficial poverty rate is the highest it has been since 2001.

The 2025 Economic Inclusion Advisory Committee Report explained what can be done so economic and social policy and systems can better enrich human capability. The report covered the inadequacy of social security payments, the inability to define and measure poverty, the use of service systems like employment services as “a nuclear bomb to kill a mosquito”, as the House of Representatives described, and the promise of early childhood reforms. It explained how some features of our social security system – like the Remote Area Allowance – haven’t really changed since before Oasis was formed.

Analysis done for the Committee showed the returns to society and the economy over the long run if we get investments right: a return of $1.24 for every dollar invested in increasing the JobSeeker rate, for example. And it’s not just the Committee saying this. A whole host of organisations, some of whom the Committee heard from directly, have been calling for these reforms over many years.

What’s most powerful from the EIAC report are the insights from people who interact with government services systems every day. They live and breathe the consequences of every economic decision made by our political leaders.

As we tune into the budget speeches tonight and on Thursday, we need economic inclusion to be a central feature of the economic story promised by the Government and Opposition. Moving towards an Australia free of poverty should be part of our economic compass. If it isn’t, we risk our social compact being disrupted and unwound. We risk the tumult seen in other countries, including our closest allies. To make a real difference at home and abroad, Australia’s economic story must be one where everyone can thrive. Right now, we cannot promise ourselves that it is.

Travers McLeod is Executive Director of the Brotherhood of St. Laurence and a member of the Economic Inclusion Advisory Committee.