Research Note 7 1999-2000

Economic Performance: Whitlam to Howard

Tony Kryger
Statistics Group
12 October 1999

The period from the Whitlam Government through to the Howard Government has been marked by significant variation in economic performance, as one would expect in a period that incorporates two major recessions. Some indicators that particularly stand out are:

• high inflation under Whitlam
• low economic growth under Fraser
• high unemployment and (paradoxically) high employment growth under Hawke/Keating, and
• strong economic growth under Howard.

The purpose of this Research Note however, is not just to focus on a few indicators but to summarise the performance of each administration across a wide range of economic indicators. For this purpose a number of period averages have been calculated. While providing a useful snapshot, there are some shortcomings with this approach. First, each administration is of a different length and therefore not equally represented in terms of the different phases of the business cycle. Second, each administration is variously affected by external factors beyond its control. Third, it takes time for the policies of each new administration to take effect and yet the economic indicators presented here measure performance from the day each administration took office. Finally, as the Howard Government is still in office, any comparison between it and previous governments will be subject to change.

Performance indicators, measured in terms of the average for each administration, are summarised below.

Labour Market

On a number of fronts, the condition of the labour market can be said to have deteriorated over the period from Whitlam through to Hawke/Keating, with improvement in some indicators during the Howard term in office. Teenage unemployment and long-term unemployment are two indicators which have worsened with each administration. The unemployment rate and the employment/population ratio have both improved during the Howard years, following a steady deterioration in these indicators since Whitlam. Employment growth was weakest during the Fraser years but strongest during the Hawke/Keating years which also recorded the lowest increase in labour productivity.

Wages and Prices

The rate of inflation in Australia has fallen steadily and dramatically from an average of 14.5 per cent during the Whitlam years to less than one per cent under Howard. Real wage growth was slowest under Hawke/Keating and fastest under Howard. During both these administrations, female real wage growth exceeded that of males.

National Accounts

The average standard of living for all Australians as measured by real Gross Domestic Product (GDP) per capita has steadily improved since Whitlam. The rate of improvement in GDP per capita was slowest under Fraser and fastest under Howard. Commensurate with this, the rate of economic growth has been slowest under Fraser at an average of just 1.0 per cent per annum and fastest under Howard with an average growth rate of 4.4 per cent per annum. National saving has fallen drastically since Whitlam with some improvement under Howard while household saving has fallen sharply under all administrations.

Finance

The size of the underlying Commonwealth budget deficit has grown from an average of 0.2 per cent of GDP during the Whitlam years to an average of 1.0 per cent under Fraser and 1.6 per cent under Hawke/Keating, with the budget almost in balance under Howard. Commonwealth tax receipts as a percentage of GDP have grown steadily under each administration. Real housing and real business rates of interest reached a peak during the Hawke/Keating years, with some improvement under Howard. The affordability of housing has improved somewhat over the period from Hawke/Keating to Howard.

External Transactions

Australia's current account deficit and net foreign debt have both increased markedly since the Whitlam term of office. Australia's debt servicing ratio, or the ability to meet interest payments on foreign debt from export receipts, has deteriorated over the period from Whitlam to Hawke/Keating but has improved under Howard. Australia has experienced a continuous fall in the value of its dollar relative to the US dollar and relative to the currencies of our major trading partners (trade weighted index)

ECONOMIC PERFORMANCE
Indicator	Units	Whitlam (ALP) Dec-72 to Nov-75	Fraser (LIB/NP) Nov-75 to Mar-83	Hawke/Keating (ALP) Mar-83 to Mar-96	Howard (LIB/NP) Mar-96 to Present
Labour Market:		- Period averages -
Employment	Annual % increase	1.5	0.7	2.2	1.7
Total employment/population ratio	%	60.0	57.5	57.0	58.1
Full-time employment/population ratio	%	52.4	48.5	45.0	43.3
Unemployment rate	%	3.3	6.2	8.7	8.2
Teenage full-time unemployment rate	%	n.a.	17.8	24.6	27.0
Long term unemployment	% total unemployed	n.a.	16.1	29.9	30.6
Labour force participation rate	%	62.1	61.2	62.4	63.3
Average labour productivity per person per hour	Annual % increase	2.3	2.3	1.6	2.7
Wages and Prices:
Inflation	Annual % increase	14.5	10.3	5.2	0.8
Real F/T adult ordinary time earnings - males	Annual % increase	n.a.	0.7	0.3	2.9
Real F/T adult ordinary time earnings - females	Annual % increase	n.a.	n.a.	0.6	3.1
National Accounts:
Business investment	% of GDP	10.8	11.6	11.7	13.1
Real GDP per capita	$	4894	5306	6309	7554
Real GDP per capita	Annual % increase	1.5	1.0	2.4	2.8
Economic growth	Annual % increase	2.9	2.3	3.8	4.4
National saving (net)	% of GDP	10.8	6.2	2.7	4.1
Household saving ratio	%	17.7	13.9	7.3	3.6
Finance:
Commonwealth underlying outlays	% of GDP	22.7	25.0	25.8	24.4
Commonwealth total receipts	% of GDP	22.5	23.9	24.2	24.4
Commonwealth tax receipts	% of GDP	20.7	22.1	22.6	23.3
Commonwealth underlying budget balance	% of GDP	-0.2	-1.0	-1.6	-0.1
Commonwealth general government net debt	% of GDP	n.a.	4.4	11.0	14.8
Real housing interest rate	%	-3.4	0.0	6.9	6.3
Real large business rate	%	n.a.	n.a.	8.3	7.7
Real small business rate	%	n.a.	0.7	8.3	8.2
Home loan affordability(a)	Ratio	n.a.	n.a.	39.6	41.2
External Transactions:
Terms of trade	Index	125.6	105.2	98.1	98.5
Balance on current account	% of GDP	-1.4	-3.5	-4.6	-4.2
Net foreign debt	% of GDP	n.a.	7.4	34.2	40.0
Debt servicing ratio	%	-0.7	-3.8	-14.0	-10.4
Exchange rate - United States dollar	$US per $AUS	1.38	1.12	0.76	0.70
Exchange rate - trade weighted index	Index	109.6	88.8	60.0	57.6
(a) Measures the relationship between median family income and average monthly repayments on new home loans. An increase in the indicator means an improvement in affordability.

Comments to: web.library@aph.gov.au
Last reviewed 17 October 2001 by the Parliamentary Library Web Manager
© Commonwealth of Australia
Parliament of Australia Web Site Privacy Statement
Images courtesy of AUSPIC