Jim Chalmers:
Today’s National Accounts show an uptick in annual economic growth and a stronger and broader private sector recovery. Australia’s economy grew 0.4 per cent in the September quarter to be 2.1 per cent higher through the year. That means in annual terms this is the fastest growth in 2 years. The really encouraging part of these numbers is to see that the growth in the private sector is gathering pace and that’s powered by the strongest growth in private investment in almost 5 years.
The biggest story in these National Accounts is the very strong growth in business investment and investment in housing as well. This is a positive and promising result. It speaks directly to the progress that we have made together in our economy. It’s especially heartening to see the way that the private sector is gathering pace when you see the business investment numbers and also when you see the progress we’ve made in this quarter and through the year in housing as well.
So in a little bit more detail when it comes to that private investment number this is the fastest quarterly growth in private investment in almost a decade. It’s making a very important contribution to growth in the quarter and through the year. New business investment grew 3.4 per cent in the quarter to be 3.8 per cent higher through the year as well. So, if you think about it in the course of the last few years since we came to office, new business investment has grown by an annualised average of 3.9 per cent. Remember it was falling 1.3 per cent on average under our predecessors. And so the new business investment story is the most encouraging, the most positive part of the National Accounts which have been released today.
But just as encouraging is the progress that we’ve made on housing, which is obvious and evident in these numbers. Investment in new housing supply is another really positive part of the story in these National Accounts. We’ve now seen dwelling investment grow for 7 consecutive quarters which is the longest consecutive streak in a decade. Dwelling investment grew 1.8 per cent in the quarter to be 6.5 per cent stronger through the year. When we came to office dwelling investment was going backwards by 3.6 per cent in annual terms. It’s now grown 6.5 per cent through the year to September. So very encouraging outcomes in this data when it comes to housing and when it comes to private investment as well.
Similarly, and we’re much more cautious here, given productivity is a long standing challenge that will take us some time to turn around in a sustained way, but very encouraging to see productivity lift for a fourth consecutive quarter as well. It’s now growing at 0.8 per cent in annual terms which is roughly consistent with the 20‑year average and, again, when it comes to the private sector story productivity in the private sector in the market sector is up 1.1 per cent through the year as well.
So, we are very cautious about the productivity figures this is a challenge that’s been a big feature of our economy for a couple of decades now, but very encouraging to see 4 consecutive quarters of productivity growth and especially encouraging to see market sector productivity at 1.1 per cent through the year as well.
Now when it comes to incomes we’ve also seen real household gross disposable income per capita grow again. In the quarter it’s now 2.1 per cent higher through the year. The compensation of employees’ number in these National Accounts which goes to wages grew by 1.7 per cent in the quarter to be 7.1 per cent higher through the year. One of the reasons why that’s important is it now means that the wages share of income has risen to 54.2 per cent when it was below 50 per cent before we came to office. The wages share of income is well over 50 per cent now, it was less than 50 per cent when we came to office.
You can also see in these numbers that the 3 interest rate cuts this year are flowing through to household budgets. We see the mortgage interest costs falling in these National Accounts. They’ve actually fallen by around $2.1 billion since the end of last year and that’s because of those 3 interest rate cuts that we’ve seen through the course of calendar 2025.
So the story of 2025 is really about this private sector recovery. And if you compare private demand with public demand this becomes even clearer. New private final demand grew 1.2 per cent in the quarter to be 3.1 per cent higher through the year. What this means is that private demand, the private economy, has now contributed more to growth than public demand for 4 consecutive quarters.
In the quarter that we’ve seen the data for today, the contribution of private demand is 3 times bigger than the contribution of public demand. And if you look over the last year, annual private demand growth has lifted more than fivefold at the same time as annual public demand growth is less than a third of what it was a year ago. All of the economic growth over the past year, the main story there has been private demand and private growth and the recovery in our private economy.
So that’s why these numbers are especially encouraging. They are positive and promising numbers in these National Accounts today and the biggest reason for that is recovering new business investment, the growth we’re seeing in housing investment, all feeding through to the private economy taking its rightful place as overwhelmingly the main driver of growth in our economy in ways that we are encouraged by and ways that we welcome. Happy to take a few questions.
Journalist:
The growth in the government spending was stronger in the quarter than household spending. Doesn’t this show that the hand over from public to private is not really happening?
Chalmers:
Absolutely not. I couldn’t disagree with you more when it comes to the contribution of the private economy versus the public economy. Overwhelmingly, the story of 2025 and the story of these National Accounts has been very encouraging and very strong recovery of the private economy. You see it in the new business investment, you see it in the dwelling investment, you see it in our consumption, you see it in the ways that incomes are feeding that consumption but especially when you look at private final demand versus public final demand. And as I said a moment ago, private demand growth has lifted more than 5 times over the last year.
And it’s contributed to all of the economic growth, at the same time as public demand growth is less than a third of what it was and so overwhelmingly. However you cut the numbers, the story here is the recovery in the private economy. This is the recovery in the private economy that we have planned for and prepared for and hoped for, and it’s pleasing to see it coming to fruition in the way that these numbers lay bare.
Journalist:
I recognise that private investment has grown. But isn’t the problem that government spending is still growing faster than household spending?
Chalmers:
No, I don’t believe that is an issue in these National Accounts and the reason for that is because if you look at the public final demand, overwhelmingly I think two‑thirds from memory of it is state spending. But even leaving that aside for a moment, the contribution to growth which is being made by the private economy absolutely multiples compared to the contribution made by public investment. And in previous years we’ve seen public demand play a bigger role in the economy, there are good reasons for that when the economy is especially soft. But right throughout the course of the last 3 or 4 years we’ve wanted to make sure that the private economy takes its rightful place as the key driver of growth in our economy and that’s what we’re seeing in these National Accounts.
Journalist:
Treasurer, how much are you looking to find in savings in MYEFO?
Chalmers:
Well, we’re still putting the finishing touches on the mid‑year budget update. We will release that later this month. We’re working very hard, Katy Gallagher and I, with the Expenditure Review Committee and the Cabinet colleagues more broadly. We’ve made it clear that in every budget update that we hand down we’re looking for ways to reprioritise some spending to higher priority areas and already in the course of the last 4 Budgets and budget updates we have found around $100 billion in savings and that’s helped us make room for investments in strengthening Medicare or providing tax cuts for all 14 million Australian workers.
So, people should expect us to continue to search for ways to reprioritise spending, it’s one of the ways that we manage our budget in the most responsible way that we can. It’s one of the reasons why we’ve already delivered 2 surpluses in our first 2 years and much smaller deficit in our third year. Now the main task of this mid‑year update will be finding room for some of the upward revisions to spending. My colleague, Matt Keogh, has spoken about the extra $1.3 billion in estimates variations in the veterans’ portfolio for example.
So, as we go through the budget in our usual responsible and considered and methodical way, one of the main tasks for the mid‑year budget update is to find room for those pressures and make room for those pressures. It won’t be a mini budget later this month, the main game will be in May. But we won’t be waiting for May in order to make some decisions to make room for some of these budget pressures which are escalating rather than easing.
Journalist:
The September quarter growth was still slower than expected. Are you hoping to see that accelerate this quarter into the new year, and do you think interest rate cuts would help with that?
Chalmers:
A couple of things about that. I mean, one of the reasons why the quarterly growth figure came in a little lower than the market was expecting is because they have revised up the quarter before. And you would understand, certainly, people who follow the National Accounts closely will know that that can have an impact. It means that we’ve actually had economic growth of at least 2 per cent in annual terms for the last 2 quarters because they’ve revised up the last quarter and that flows through to the calculation for this quarter. That’s a big part of the story.
Another part of the story is inventories particularly when it comes to coal and gold, that’s making a detraction from growth here. But overwhelmingly, the story here is about the engines of private sector growth firing up and we want to see that continue. And so much of our agenda is about encouraging our economy to grow, encouraging our private sector to make great investment decisions. And looking at these National Accounts today one of the reasons I describe them as positive and promising is because we need this investment to flow, to make our economy more productive, more resilient, over time and so it’s very welcome from that point of view. Obviously want to see the economy continue to grow and we want to make sure that the private sector continues to be the main reason for that growth.
On interest rate decisions, as you know, I don’t predict or pre‑empt decisions taken independently by the Reserve Bank and its board. There’s already been 3 interest rate cuts this year, that’s one of the reasons why mortgage repayments are down $2.1 billion, that’s providing some welcome relief to people who are still doing it tough.
Journalist:
Treasurer, last week you said that you would be looking closely at today’s GDP figures before making a call on whether to continue energy rebates. Given the GDP print is softer than what economists predicted, does this make a stronger case that households need that continued support?
Chalmers:
Well, we’ve made it really clear that the electricity bill rebates are an important part of our budget but not a permanent feature of our budget. There were important reasons for us to introduce and extend on a couple of occasions the electricity bill rebates that are in the budget. We have been really upfront with people all along and said people shouldn’t expect that to be a permanent feature of the budget.
We’re still putting the finishing touches on the mid‑year budget update. These numbers that we’ve got today are an important input in to putting that document together. We’ll make all of those final decisions, but as we’ve said now I think on countless occasions people shouldn’t expect those electricity bill rebates to go on forever.
Journalist:
How confident are you –
Chalmers:
We’ll go back to [inaudible] and then back to you.
Journalist:
Treasurer, would reducing government spending help prevent a rate rise next year?
Chalmers:
Well if public spending is the key determinant of interest rate decisions, we’ve had 3 interest rate cuts this year. And 2 of those came after the Budget that Katy and I handed down in March. But overwhelmingly, the pressure on inflation and some of the issues that the Reserve Bank grapples with, you know, they haven’t been identifying public spending as part of the story.
Even today when the Governor was asked about the relationship between budgets and monetary policy decisions she was speaking I think overwhelmingly about global conditions. The Governor has made it clear on other occasions that we’re a bit different to other countries, we’ve had those 2 surpluses, we’ve got a much stronger, much smaller deficit in our third year. Debt to GDP is a fraction of a lot of other countries.
We’ve got the peaking debt down. There’s $200 billion almost less debt in our budget than when we came to office and so we’ve been managing our budget in the most responsible way that we can. We’ve seen 3 interest rate cuts already this year. I think the pressures on inflation and some of the considerations around interest rates are not primarily about the budget position but if they are we’ve seen those 3 cuts already this year.
Journalist:
How confident are you that real wages will continue to improve?
Chalmers:
Well we’ve seen 2 consecutive years now of real wages growth and real wages were falling sharply when we came to office. We’ve deliberately turned that around. It’s been a really a key feature of our economic plan to make sure that more people are working, earning more and keeping more of what they earn with the tax cuts. Obviously the real wages calculation is about inflation and it’s about the wage price index.
We’ll update our forecasts in the usual way in the mid‑year budget update, but already to have those 8 consecutive quarters of real wages growth is a key reason why incomes have recovered in our economy and why we’ve seen over the last year or so the increase in consumption. We’ve been able to make sure that we get wages moving again, interest rates have been cut 3 times this year, we’re providing cost‑of‑living relief in other ways and that’s all important ways that we help people who are still doing it tough.
Journalist:
With inflation ticking up again do you have any concerns that it might over take wages growth in the new year?
Chalmers:
Well obviously we want to see a real wages growth continue for as long as it can and we’ll update our forecasts for the CPI and the WPI in the usual way over time. But those 2 years of real wages growth shouldn’t be lightly dismissed, it’s a key reason why we’re seeing this recovery in incomes including incomes per person. When we came to office living standards were falling sharply, real wages were falling sharply, housing investment was falling sharply, business investment on average was [inaudible] and we’ve been turning that around and those are the reasons why we’re so encouraged by these numbers today.
Journalist:
Michelle Bullock has come out and told estimates that we’re facing a chronic under build of new homes and we’re likely to miss your target of 1.2 million new homes by the end of the year. What more can be done to ensure that we do those targets and do you believe that you will miss them?
Chalmers:
Well first of all, the target is not for the end of the year.
Journalist:
End of the decade.
Chalmers:
No, understood. No problem. Look, I wasn’t able to watch Governor Bullock’s testimony, as it turns out I was actually at a ceremony to open 500 new apartments at Bowen Hills near where you work in that wonderful neighbourhood around where so much of the action will be for the Olympics. Look, we’ve acknowledged as a government that we need to build more homes. That’s the whole reason why we’ve got this ambitious but achievable housing target for 2029. It’s why we’re throwing so much time and energy and resources in to building the homes that Australians desperately need, because we recognise that this is one of the defining challenges in our economy.
Now, that target is ambitious but it is achievable if everybody does their bit and the Commonwealth is doing its bit, $43 billion in investment working with the states, with local governments, working with the industry, working with investors, providing all kinds of different ways that we’re encouraging the building of more properties in our local communities. And again, I refer you to the National Accounts today because today’s National Accounts show that investment in new homes is growing strongly. It’s actually one of the key stories out of the National Accounts today. So we need to maintain that momentum. We need to build that momentum and if we do that, if we keep, if everyone does their bit we can hit that very ambitious target.
Journalist:
Who is not doing their bit?
Chalmers:
Well I’m not putting it that way, I’m just saying we all need to do our bit. The Commonwealth is doing its bit, we’re working closely with the states and local governments, the industry we’re engaged with very closely. Clare O’Neil, the minister, is doing a heap of good work in this area. We all need to keep up the effort.
We’ve got these very strong housing investment numbers in the National Accounts today, that’s a good thing, but we need to sustain them. We need to sustain this momentum. We still don’t have enough homes because of basically the missed opportunity of the decade before we came to office. So we’re playing catch up, we’re doing everything we can, and we’re working closely with all of the relevant parties to build the homes that Australians desperately need.
Journalist:
Just to circle back to the rebate question. It’s expected that inflation will remain sticky as it stands and households won’t have that $75 a quarter rebate from January. Treasurer, what do you have to say to families that are staring down the barrel of an expensive December and new year and currently don’t have certainty on whether they can factor in a potential rebate into their budgets in the new year?
Chalmers:
Well we understand that even with the very substantial progress we’ve made on inflation and real wages and per person incomes, we know that a lot of Australians are still doing it tough. And that’s why we’re rolling out very substantial cost‑of‑living relief, cheaper medicines, more bulk billing to take pressure off family budgets. There are 2 more tax cuts on the way as well.
Now we’re rolling out very substantial cost‑of‑living help in the most responsible way that we can. Which is cognisant of all of the pressures that we have on the budget. So the electricity bill rebates are an important part of the cost‑of‑living help that we have been providing but they’re not the only part of it. Tax cuts are a big part of the story, getting wages growing again, the increase in Commonwealth Rent Assistance, cheaper medicines, more bulk billing, all of this is about trying to alleviate some of the pressure that we understand people are still facing right now.
Journalist:
You say that households shouldn’t expect those rebates to continue, you have said that repeatedly. But don’t they deserve some certainty either way, whether that’s you guys ruling it out completely? Why keep that limbo going?
Chalmers:
Well, we make these decisions from budget update to budget update in the usual way. It’s not especially unusual to make those decisions close to the finalisation of our budget updates. This is a government that manages the budget in a really responsible way, in a way that would be unrecognisable to our predecessors and part of that is to make sure that we do the work, in the lead up to budgets and in the lead up to mid‑year budget updates, to only commit to what we can afford.
There’s a lot of pressures on the budget. We’re rolling out cost‑of‑living help in the most responsible way that we can and we’re being upfront with people and saying those energy bill rebates and we’ve said now for a couple of years are not a permanent feature of the budget. That we shouldn’t expect them to continue forever and we’ll make a decision on them in the coming days.
Journalist:
What would persuade you to keep the rebates?
Chalmers:
I’m obviously not going to go in to all the conversations that we have, the Expenditure Review Committee or as a Cabinet, or my colleagues –
Journalist:
Yeah, but what would persuade you to keep it, what would be some of the factors that would make you think, we should keep this?
Chalmers:
Well again, I’d answer the question in precisely the same way I started answering it a moment ago. I’ll give you the same answer. We’re providing cost‑of‑living help in a range of ways. Not just in that way. We’ll weigh up all of the various considerations in every budget and in every budget update we consider the economic conditions, we consider the fiscal pressures and we do what we responsibly can to help people.
We’ve been doing that in a range of ways, not just one way over the course of the last couple of years. We’ve got the National Accounts now, that’s really the last key input before we make a remaining handful of decisions in the lead up to the mid‑year budget update. Not long to wait now, it will be this month, and when we release that we’ll provide all of the numbers and all of our reasoning behind the numbers.
Thanks very much.