Best ‘era’: The decade Australia last thrived

It was the era our economy was growing strongly, the average Aussie could afford homes and unemployment had fallen.

On Friday, the global phenomenon that is Taylor Swift’s Eras Tour came to Melbourne’s MCG, after many months of anticipation for the nation’s Swifties.

From the US Federal Reserve to local academics, many are anticipating the outsized economic impact the Eras Tour may have on the economy. According to RMIT Associate Professor Angel Zhong, a conservative estimate for the impact of Eras Tour on the Aussie economy was an increase in GDP of $320 million.

Taylor Swift’s Eras Tour could increase GDP to the tune of $320 million in Australia. Picture: Marcelo Endelli/TAS23/Getty Images for TAS Rights Management

But what would a tour through the eras of Australia’s economy look like through the decades?

We thought we’d find out by looking at three metrics, the labour market, real household disposable incomes and housing affordability from 1983 to 2023.

1983 to 1993 era

Of all the eras we’ll be looking at today, this one has the most variation.

On one hand it saw the explosion in nominal household disposable incomes in per capita terms, on the other it saw relatively weak growth after adjusting for inflation and an absolute rollercoaster in unemployment.

In the middle of 1983, when Australians radios were pumping with Michael Jackson’s number 1 hit ‘Billie Jean’, the nation’s unemployment rate was 10.5 per cent. Over the next six and a half years of the ‘80s, it would fall by 4.7 percentage points to sit at the lowest level since 1981.

At quite literally the dawn of the 1990s, things went in the other direction. Between December 1989 and December 1992, unemployment would rise by 5.4 percentage points to 11.2 per cent, the highest level since the Great Depression.

While this era presented profound challenges to households most impacted by the upheaval of this decade, for most households it represented a time of extremely strong nominal wages growth, which helped households pay down debt and mortgages at a rate that today’s households could only dream of.

Housing affordability during this time was very much a mixed bag. At the start of this era, housing was relatively affordable and particularly with the $8000 grant from the Hawke government for eligible first home buyers.

However, by 1990, the cash rate would hit its peak of 17 per cent, presenting a profound challenge for impacted households. It is however worth noting that the cash rate would crash dive to 4.75 per cent over the next three years, presenting one of the greatest monetary policy windfalls for indebted households in Australian history.

1993 to 2003 era

This era saw enormous progress in the battle against unemployment, with the headline jobless rate falling from 11.0 per cent at the start of the era to a low of 6.0 per cent in the year 2000. In terms of real household per capita incomes, it saw the second strongest level out of the four assessed decades, clocking in at 18.3 per cent across the decade.

It was also the last period of broadbased affordable housing at a national level. According to an analysis by AMP, the 1993 to 2000 period saw the time to save for a deposit for the median home in the five to six year range vs. over a decade today.

According to an analysis by PropTrack this period for the housing market saw Australians on the national median household income able to buy the median priced home nationally, based on the household having a 20 per cent deposit, extra cash for various duties and transactions fees and paying 25 per cent of their gross income in mortgage repayments.

But this era also marks the beginning of the deterioration in housing affordability from which the nation has never recovered from. As the capital gains tax discount, the Howard government’s doubling of first homebuyer grants, rate cuts and other factors combined to send housing prices rocketing.

2003 to 2013 era

This era saw by far the strongest real household per capita income growth, as the mining boom and later government stimulus designed to counteract the impact of the GFC saw the economy power ahead.

But in some ways, it’s a tale of two distinct periods. Between Q3 2003 and Q4 2010, real household disposable per capita incomes grew by 25.8 per cent, significantly more than the entire prior decade combined. But across the remainder of this period in aggregate, this metric went backwards.

This era would also see housing affordability continue to deteriorate despite multiple rounds of rate cuts. According to an analysis from PropTrack, this time would see the worst lows for housing affordability for households across the income spectrum until the current rate rise cycle.

For the labour market, this period would see the continuation of the down trend in unemployment that had largely persisted since 1993 until the Global Financial Crisis. During this era unemployment hit 4.0 per cent, its lowest level since the mid-1970s.

The GFC would see unemployment rise significantly to a peak of 5.9 per cent and then remain in a relatively tight range over the remainder of the era.

2013 to 2023 era

Considering the fact that this decade encompasses the pandemic, it was always going to be something of a rollercoaster ride.

Across this period, real household disposable income per capita fell by 0.6 per cent, by far the worst performance of any decade assessed today. In terms of GDP per capita, which was boosted significantly by the genesis of the nation’s LNG export industry, the decade saw average annual growth of 0.93 per cent. The 1930s which encompassed the Great Depression saw a decade average of 1.2 per cent annual growth.

Between 2013 and the start of 2020, the labour market saw unemployment in a relative tight 1.4 percentage point range between 5.0 per cent and 6.4 per cent. The onset of the pandemic swiftly saw the headline unemployment rate rise to 7.5 per cent, before the impact of reversing net migration and government stimulus saw the unemployment rate fall to the lowest level since 1974.

During this period, housing affordability was a challenging prospect for new entrants, with the time taken to save for a deposit averaging 10 or more years. In terms of broader affordability as measured by PropTrack, it has seen some wild swings as rates were crash dived to record lows and then raised to the highest level in over a decade.

But as we close out this particular era, property is more unaffordable today for a median household than at any other point in the almost 30 years of data assessed.

The best era

In any society the progress of a nation’s people and their household budgets are relative and a matter of perspective. For this reason, there will be a multitude of different viewpoints on what era was best for Australians. But in terms of progress, its hard to go past the 1993 to 2003 era, particularly the late 1990s. The economy was growing strongly, households from the affluent to the average could afford homes and unemployment had fallen from the highest levels since the Great Depression to one of the lowest levels since directly comparable records began in the late 1970s.

Tarric Brooker is a freelance journalist and social commentator | @AvidCommentator