Population growth won’t be able to hide problems within the economy

The federal government's `mad, bad and dangerous’ population growth won’t be able to hide the fundamental issues with the economy.

RBA Governor Michele Bullock.

Sorry Michele, the all-too real, the all-too painful, ‘per capita recession’ that Australia is deep into, is not just very, very relevant; it’s ultimately the only thing that’s relevant.

At its simplest, there’s no point – indeed it is the most fundamentally counter-productive thing any country could do – increasing the size of the economy by, say, 20 per cent, while increasing the population by, say, 50 per cent.

In that outcome we all get poorer. The country gets poorer; every single person gets poorer.

It’s the fact, by the way, that we have been doing the exact opposite, since the mid-19th century – growing the economy faster than population – why we have the prosperity, the lifestyles, the basic health we have.

All ultimately thanks, even more fundamentally, to fossil fuels.

There is not only ‘no point’, to growing population faster than the economy, but that is exactly the path that we have been on since the election of the Albanese-Chalmers government in May 2022.

It is the irresistible, inevitable outcome of a policy combination of supercharging population growth and doing everything, at the same time, to stop the economy growing, with its broadbased anti-business anti-productivity, albeit utterly mindlessly, agenda.

A further word to the wise, Michele – Michele Bullock of course, head of the Reserve Bank – you are setting yourself up to be the ‘fall guy’ when it all turns to custard.

As it will, as it absolutely certainly will.

It will be ‘all your fault’, for not slashing interest rates quickly or far enough. Reference: Keating P and Johnston R, circa 1991.

On Wednesday, Bullock told our worthy Senators that the ‘per capita recession concept’ wasn’t that useful, that it was bandied around in a way that wasn’t very helpful.

If she had her time again, I suggest she would all-but certainly rephrase that.

Helpful to whom, governor?

The 27 million Australians who are living with the reality of the economy shrinking in real per-person terms?

Furthermore, and much more directly pertinent to Bullock and what she does with interest rates, this per capita recession reality will inevitably play out into a full-blown conventional recession.

Indeed it is already.

She really should understand that there is a direct link between the 1.3 per cent fall in per capita GDP over the year to the March quarter and the pathetic – the lowest, outside Covid – 1.1 per cent rise in overall GDP.

I’m not talking about the obvious arithmetic link.

But the real-world reality that if people are growing poorer individually, that plays out, negatively, into the broader economy.

Knock, knock, consumer spending is sluggish at best. I wonder why?

Maybe, just maybe, because consumers have less money to spend; because in per capita terms across the economy there is less being spread about?

Talking about a ‘per capita recession’ – the first, the very real, and the longest we have had in the 50 years of detailed ABS data – is far more disturbingly meaningful, and important for policy guidance, than the always inane so-called ‘technical recession’.

Precisely because this government’s mad, bad, and dangerous population growth keeps overall GDP growth, just, positive.