Australia’s swinging safari from the 70s to today

| March 21, 2018

The 1970s nostalgia movie Swinging Safari gets the hair, clothes and music right — but what about the Australian economy?

In the 70s one in four people worked in factories. Half the workforce were union members, and strikes were an everyday occurrence. Almost all men worked full-time. Most mothers were not in paid work. Young people could leave school at 15, and many did. Few went on to university.

There were plenty of entry-level jobs for school leavers in banks and offices and the public service, as well as apprenticeships in publicly owned utilities. Shops closed at noon on Saturday and re-opened on Monday. Cash was used for almost all transactions, which came in a pay envelope or by taking your deposit book to a bank.

Viewers could watch one of only four channels on television. Along with lots of whitegoods, televisions were often hired rather than purchased outright, because they were expensive. New car prices were high. Almost everyone drove a car made in Australia. Interstate phone calls were held back to Sunday evenings to get the Telecom cheap rate.

It was rare to fly interstate, with choice limited to the government backed TAA or the privately owned Ansett whose schedules largely duplicated one another. Inflation and interest rates were high, and volatile.

The decade began with full employment and ended with an unemployment rate of 6 per cent. The past is, indeed, another country.

Daily media discussion of the Australian economy is relentlessly focused on short-term movements in exchange rates and share prices on the ASX100, and is too abstracted from people’s actual experience of economic life.

In a new series, Industry Insights — a successor to the annual Australian Industry Report — we stand back and take a considered view on how the Australian economy is changing and what impact this is having on businesses, communities and citizens.

In the first issue of this series, we present three inter-related chapters under the broad theme of flexibility and growth.

The flexibility of the economy is evident in each one of the domains detailed above compared with life in the 1970s. Taking just one example, trading hours are now far more liberal for retailers and consumers, and a significant and growing proportion of retail trade is now transacted online at any time of the day and week.

The Australian economy of today is $1.7 trillion in size, compared with $0.5 trillion in the mid-1970s (after taking account of price changes). That makes it medium-sized rather than small as is commonly thought: Australia ranks around 14th in the world on current exchange rates.

On a per capita basis, cumulative growth has seen average living standards double since the mid-1970s. The opening chapter will remind us of the series of changes made by governments in the 1980s and 1990s to open up, liberalise and modernise the Australian economy.

Historians will argue for decades to come about how it was that in 2017 Australia came to hold the global record for years of avoiding recession, but the groundwork was laid in these changes. While recession has been avoided, notably during the global financial crisis, the crisis still cast a shadow over Australia.

Since 2008, there has only been one year where economic growth has been above its long-run average of 3.25 per cent. And the unwinding of the record high terms of trade, as resources supply caught up with the tremendous growth in resources demand from China, has seen incomes and wages plateau for several years.

Against this backdrop, the second chapter will present the economic year in review and finds signs emerging of a more positive growth outlook: business investment is rising and exports, profits and new jobs all increased significantly. Time will tell whether these positive developments will flow through to higher incomes and wages.

In last year’s Australian Industry Report we presented the first-ever estimates of economic activity in each of the regions of Australia. In the third chapter we extend this analysis over time, capturing growth in economic activity for 88 regions of Australia from the start of the century. This analysis proves the adage that averages hide much variation.

The chapter will show that there are two tales to disentangle here. The first is the scale of the resources boom: the ten fastest growing regions were all in Western Australia, Queensland and the Northern Territory, while the lowest were all in regions unaffected by the boom.

The second is the pull of capital cities, especially their central business districts whose output grew well above the national average. This trend is likely to persist, as the factors that drive growth in modern economies — dense networks of skills and finance and innovation — are concentrated in cities.

Each chapter is supplemented with thoughtful contributions from guest authors. Charlie Day of Innovation and Science Australia discusses how Australia’s innovation system can meet future challenges, Andrew Charlton of AlphaBeta examines how we can best prepare workers for the jobs of the future and Danielle Wood of the Grattan Institute argues we must go with the grain of the forces shifting Australia’s economic geography towards major cities.

Compared with the 1970s, the Australian economy today is more open, more flexible and is, as a corollary, more fluid: there is less certainty that what holds today will remain the same tomorrow, hence some of the current disquiet about automation.

More than ever, therefore, considered analysis of the drivers of change and the impacts it is having are required. I hope that this new series meets that need. In coming months we will be releasing two further issues of Industry Insights on how globally connected the Australian economy is and on trends in productivity