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Recession or depression? Australia’s economic insecurity precedes national security

Many have long believed that Australia’s economy is unassailable – our three decades of unstopped economic growth to continue forever – now, however, the ship has run aground and we face very real implications.

Many have long believed that Australia’s economy is unassailable – our three decades of unstopped economic growth to continue forever – now, however, the ship has run aground and we face very real implications.

For successive generations of Australians, the economic success and growth of the national economy have been the gifts that keep on giving.

Skyrocketing resources and agricultural prices, backed by our “services” economy and the robust, voracious appetite for Australian real estate has seen an explosion in the individual or per capita wealth of Australians, or at least that is what was thought and what we were told.


During this period, Australia, like many Western nations, effectively waived goodbye to their economic and industrial complexity, depth and diversity, in a wave of unbridled economic liberalisation that gave rise to the era of free trade and hyperglobalisation.

Not even the Asian Financial Crisis of the mid-1990s, or the Global Financial Crisis of 2008, which laid the United States and Europe low, could slow the inevitable march of growth that had come to characterise the Australian economy.

However, none could escape the economic turmoil that was wrought by the COVID-19 pandemic and the unrestricted quantitative easing unleashed by governments around the world, Australia included.

Now the chickens have come home to roost as the world continues to devolve into great power competition characterised by economic, political, and strategic tensions.

Australia finds itself at the epicentre of this new great game, as the Indo-Pacific has rapidly become the next major background for the worlds established and emerging great powers, many with their own designs for the region that conflict with Australia’s own national interests and security.

In confronting these challenges, Australia’s economy has begun to show signs of fatigue at best and necrosis at worst, with devastating impacts for the average Australia and more broadly on the nation’s stability, prosperity, and security.

For economist Leith van Onselen of MacroBusiness, this spells disaster as the nation stumbles towards recession at both the per capita and whole-of-nation level, with truly disastrous consequences for the nation.

Speaking to Ben Fordham, van Onselen revealed that Australia and Australians now face economic headwinds that only serve to prolong the necrosis that now characterises the national economy.

Growing the pie, but not at the individual level

While many Australians, particularly those who grew up in the heady days in the immediate aftermath of the Second World War, have seen the accumulation of immense wealth in terms of both physical assets and less tangible assets, like shares, this isn’t necessarily the case for younger generations.

In contrast for younger Australians, particularly those born beginning in the 1980s and 1990s, the path to building wealth has become increasingly difficult, with it only becoming more difficult for each successive generation.

Highlighting this, van Onselen explained the pivotal role population growth, particularly through migration, has played for growing wealth for both policymakers and Australian investors in recent decades, saying, “Basically Australia’s been in what’s called a per capita recession for basically three consecutive quarters. Now, what that is, that’s basically when per capita, per person, we’re all going backwards. So we’ve got a situation in Australia and everyone here knows it.”

Going further, van Onselen added, "Massive population growth is keeping us out of a technical recession, which is basically when you have two consecutive quarters of overall economic growth. But the economy is not growing fast enough to keep up with the population growth. So basically, we’re growing the economic pie via population growth.

“But everyone’s sliced. The pie has been shrinking for three consecutive quarters and households are copping at the hardest because basically per capita households, their disposable incomes fell by 6 per cent last year,” van Onselen explained.

This echoes statements by AMP chief economist Dr Shane Oliver, who explained, “We’re pumping more people in but we’re not producing more stuff per person ... We’re inflating our economy by pumping more people in but it’s not giving us growth in living standards per person – we’re actually going backwards and also productivity is going backwards.”

Despite this, Treasurer Jim Chalmers, at a press conference in September of 2023, told reporters, “The Australian economy remains steady and sturdy in the face of unrelenting pressure. Economic growth held up relatively well despite the inevitable toll of higher interest rates, high but moderating inflation and continuing global uncertainty, particularly as it relates to China. We know that there are challenges ahead but we face them from a position of relative strength.”

The Treasurer reinforced this, adding on Wednesday, “Despite the challenges and the pressures coming at us from around the world and from around the country, whether it’s global economic uncertainty or heavy weather, whether it is this inflation challenge, and the impact of recent interest rate rises, we do face the period ahead from the position of genuine economic strength.”

However, over the immediate term, it is clear this “position of relative strength” or “genuine economic strength” is readily overstated, as the national economy is significantly exposed to relationship, demand, and increasingly mercurial whims of our major trading partner and major strategic threat, the People’s Republic of China.

This is reflected in the government’s Intergenerational Report 2023: Australia’s future to 2063 which explains that, “The Australian economy, like other advanced economies, is projected to grow at a slower pace over the next 40 years than in the past 40 years. Real GDP is projected to grow at an average annual pace of 2.2 per cent – 0.9 percentage points lower than the average of the past.”

For younger Australians, this is all not mere theory, it is lived reality and something that they confront each and every day and for them, it now largely becomes a debate between whether we face a recession or a depression.

Meanwhile, for Australia’s national interest and national security, this all combines to have a disastrous outcome in the era of renewed great power competition and multipolarity.

One team, one dream

Despite successive Australian governments of both persuasions seeking to expand Australia’s integration and participation in the economic miracle that is the rise of the Indo-Pacific, China has continued to dominate the nation’s economic narrative from the housing sector to agriculture and resources and energy.

Furthermore, Australia’s insistence on pursuing “free trade agreements” with nations that have additional layers of legislative and bureaucratic industry protections, combined with successive governments presiding over the death of Australia’s manufacturing sector and a reluctance to invest in advanced manufacturing techniques, has prompted Australia to become little more than a mine and farm for the rising powers of Indo-Pacific Asia and the very embodiment of the lazy country moniker, which author Donald Horne originally intended the “Lucky Country” to be known as.

This only becomes more important following the overwhelming response of young Australians to calls for the nation to reinstitute conscription to build out the nation’s defence capabilities.

Forgive me for sounding a bit like a broken record when it comes to this subject and its multitude of intricacies, but the deterioration of circumstances at home and abroad necessitates a radical step change.

Addressing these issues is now of paramount importance for Australia, in particular, as we face an increasingly multipolar global paradigm where the economic, political, and strategic power of our “traditional, great, and powerful friends” is relative when compared to the rising global and regional powers, each with their own interests, designs, and ambitions for the new world order.

Dr Ross Babbage of US think tank Center for Strategic and Budgetary Assessments, in his 2023 book, The Next Major War, highlights the need to rapidly respond to these challenges and for Australians to come together and pull together in a common vision.

“It is really critical that we make ourselves more competitive. And many Australians have forgotten that, you know, for us to be prosperous and fully employed, and have good futures for our children and so on, then, competitiveness really is critical to our success, otherwise, we’re going to be an economic backwater. And we’ll be very vulnerable in international security terms as well, and much more dependent upon other countries for our security. So we have to get more efficient and effective and more competitive, we have to attract more foreign investment and our own investment, to do sensible things in this country,” Dr Babbage explained to Defence Connect in a 2023 podcast.

Unpacking the implications of this further, Dr Babbage added, “If, in a crisis, this, the sort of crisis we’d now might face, it’s not going to be the military that are going to be winning the war, if you like, on their own, they are very, very important. But it’s going to be all of society, this is going to be, it’s going to involve just about everybody.

“We will all be involved. The sooner we tell the public and the sooner we brief people properly, and the sooner we have discussions and debates about these issues, the better. I’m very confident that the Australian public’s gut feeling on this would be very standard and sensible. But I think the reality is that, unfortunately, some politicians in the United States, and certainly also in Australia, they do not want this stuff talked about,” he detailed.

Dr Babbage issued an important challenge that we now must increasingly consider and voice more directly with our political leaders and the Australian public, saying, “I think what we’ve got to show what’s the vision for Australia, you know, what can we achieve and what you know if we go on the trajectory we are on at the moment. I’ll tell you what, you know, a lot of people, a lot more people in a decade’s time are likely to be either in really dumb jobs or maybe not have jobs at all, and in the society be a lot weaker and will be a lot less prosperous.

“So what we want to say is, look, there’s plenty of scope for doing more and smarter things, encouraging investment to do that, and then there will be some very, very interesting additional jobs and opportunities, a lot of high tech, and so on, I can tell you that, you know, talking to foreign investors, they’re quite keen on principle to work here, and do a lot more here and provide a lot more good jobs for Australians,” he explained.

Final thoughts

For generations of Australians in the early to middle stages of the careers, at the time that they should be settling down and starting families, our system is unavoidably stacked against them.

Is it any wonder alternative methods of political engagement, policy making, and economics are attractive to people when they are promised the world for little to no effort?

At the same time, we have seen a corresponding rise of social, cultural dislocation and disconnection coupled with individual aimlessness and the resulting impact on personal identity and mental health among younger Australians.

By helping to provide a rallying call – creating a compelling narrative full of excitement, opportunity, and purpose – policymakers can help reverse the trend of stagnation and decline, allowing Australians to turn the tide and build a resilient and competitive nation for this era of renewed competition between autarchy and democracy.

Expanding and enhancing the opportunities available to Australians while building critical economic resilience, and as a result, deterrence to economic coercion, should be the core focus of the government because only when our economy is strong can we ensure that we can deter aggression towards the nation or our interests.

This also requires a greater degree of transparency and a culture of collaboration between the nation’s strategic policymakers, elected officials, and the constituents they represent and serve – equally, this approach will need to entice the Australian public to once again invest in and believe in the future direction of the nation.

Additionally, Australia will need to have an honest conversation about how we view ourselves and what our own ambitions are. Is it reasonable for Australia to position itself as a “middle” or “regional” power in this rapidly evolving geopolitical environment? Equally, if we are going to brand ourselves as such, shouldn’t we aim for the top tier to ensure we get the best deal for ourselves and our future generations?

If we are going to emerge as a prosperous, secure, and free nation in the new era of great power competition, it is clear we will need to break the shackles of short-termism and begin to think far more long term, to the benefit of current and future generations of Australians.

Get involved with the discussion and let us know your thoughts on Australia’s future role and position in the Indo-Pacific region and what you would like to see from Australia’s political leaders in terms of partisan and bipartisan agenda setting in the comments section below, or get in touch at This email address is being protected from spambots. You need JavaScript enabled to view it. or at This email address is being protected from spambots. You need JavaScript enabled to view it..

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