Economic philosophy in Australia

Post World War II, the level of investment drove economic growth for almost three decades. Chart 4 illustrates the importance of investment to Australian economic growth from 1987 to 2025 which encompasses structural reform. Business investment peaks at 15.8% of GDP in 1995; but, except for an extraordinary peak in 2012, business investment steadily declines.

Dwelling investment peaks in 2003; but its contribution to economic growth continues to contract. In face of this long-term decline in housing investment, the contemporary debate over a housing crisis demonstrates a decline in the standard of contemporary economics.

Chart 3

Compiled from RBA Statistical Tables online

Chart 3 illustrates structural change in the composition of employment between full time and part time employment as economic growth declines. Full -time employment has fallen from 84.5% of employment in1978 to 68.9% in 2024. Meanwhile, part time employment over the same period increases from 15.4 % to peak at 31.6% in 2019.

Amongst part time employees are workers seeking more hours of work than are available in their normal workplace. These employees are referred to as multiple job holders. In 2025, the ABS identifies 948, 980 multiple job holders or 6.4% of the work force. The distribution of employment and income is clearly a major policy issue.

4. Structural change Australian economy

Structural change in the Australian economy can be estimated by plotting the openness of the economy. The openness of an economy is the sum of exports plus imports expressed as a percentage of GDP. The remaining percentage becomes the domestic sector of an economy.

Chart 4

Compiled from RBA Statistical Tables online

Opening the Australian economy to globalised markets trading freely was never a costless exercise conferring unlimited benefits. Accompanying trade liberalisation was financial liberalisation in which Australians invested in overseas markets whilst overseas investors took advantage of Australian investment opportunities. Put simply, Australians earned investment income offshore whilst overseas investors earned income in Australia. The net income flow between overseas income earned by Australian investors and international investors in Australia becomes the current account entry "Net Income Deficit" which can be found in RBA Statistical Table I5.