Today's June Quarter National Accounts confirm that 2015-16 was Australia’s 25th consecutive year of economic growth and show our economy growing at the fastest rate in four years, but we must continue to push for stronger growth.
Our economy is growing faster than every G7 economy, well over twice as fast as the United States and Canada and well above the OECD average.
Real GDP grew by 0.5 per cent in the June quarter and by a strong 3.3 per cent through the year, up from 3.0 per cent in the March quarter.
Year average growth for the 2015-16 financial year was 2.9 per cent, which is stronger than the 2½ per cent forecast in the 2016-17 Budget.
The Australian economy continues to perform strongly in the face of global challenges and strong headwinds. Today’s National Accounts once again confirm the successful transition being managed in our economy from the largest resources investment boom in our history to broader-based growth.
But we must continue to take action to strengthen our economic resilience to deal with the likelihood of externally driven shocks. This is why the Government is committed to arresting the level of Government debt by returning the budget to balance through disciplined expenditure restraint and a tax system that supports growth and provides sustainable revenue.
Economic growth in the June quarter was driven by household consumption, public investment and dwelling investment, more than offsetting the continued and expected decline in resources investment.
The changing composition of our growth drivers demonstrates the flexibility in the economy that is delivering the transition to broader-based growth. The confidence we have seen in consumers and businesses is translating into activity.
Household consumption rose 0.4 per cent in the quarter and contributed 0.2 percentage points to growth. Consumption rose 2.9 per cent through the year.
Dwelling investment rose by 1.6 per cent in the June quarter to be 8.3 per cent higher through the year. Households are responding to record low interest rates and we are seeing strong growth in housing supply. The considerable pipeline of work to be commenced provides confidence that dwelling investment will hold up for some time.
While net exports detracted 0.2 per cent from growth in the quarter, this follows a particularly strong 1.1 per cent contribution from net exports in the March quarter. Net exports have contributed 2.2 percentage points to growth through the year.
Exports continued to grow in the June quarter, rising 1.3 per cent to be 9.6 per cent higher over the past year as businesses take advantage of new export agreements with our key trading partners. This is the highest through the year growth in exports since the Sydney Olympics.
The growth in exports is broad-based. Mining exports rose by 15 per cent over the past year as the industry continues to shift from the investment phase to the production phase. Services exports are up 6.3 per cent through the year, with tourism and education continuing to be strong performers. The services sector contributed 0.8 percentage points to growth in the quarter.
Falls in mining investment continue as we transition from the investment phase of the mining boom. Business investment continued to detract from growth in the June quarter, falling by 1.9 per cent to be 10.6 per cent lower than a year ago.
Australia's terms of trade increased by 2.3 per cent in the quarter ‑ the first quarterly increase in over two years – reflecting the resilience in commodity prices during the quarter. However the terms of trade are still 34 per cent below their peak and remain at 10 year lows and this continues to affect our nominal growth.
Real net national disposable income per capita, a measure of living standards; increased for the second quarter in a row (after revisions to the March quarter) to be 1.0 per cent higher through the year.
Profit growth in the quarter saw increases not just in mining, but also strong gains in manufacturing and in services such as finance and insurance. Wage growth however remains below longer term trends.
Nominal GDP rose 1.3 per cent in the quarter to be 3.4 per cent higher through the year, supported by the higher terms of trade.
This is the strongest nominal growth result in over two years.
Hardworking Australians are making a positive contribution to our economy. Labour productivity in the market sector grew 1.5 per cent in the quarter to be 2.9 per cent stronger through the year.
Nominal GDP growth remains 2.4 percentage points lower than the 20 year average, underscoring the challenge of returning the budget to balance and reducing debt.
During previous periods of fiscal consolidation nominal GDP growth averaged close to 6 per cent in the 1990s and over 11 per cent in the 1980s.
In order to maintain our economic momentum and living standards and attract investment it is essential that we ensure the conditions are in place to support continued growth. It is simply not enough to presume our exceptional run of growth will continue or that another unprecedented boost in commodity prices will alleviate our budgetary constraints.
It is for this reason that the Government remains committed to pursuing policies and reforms that improve productivity and grow our national income, and will resolutely oppose policies that threaten our continued prosperity.