Australia has experienced a significant decline in living standards, according to the Organisation for Economic Co-operation and Development (OECD). Between the end of 2019 and the first quarter of 2024, real per capita household disposable income in Australia fell by 8.0%, contrasting sharply with the OECD average increase of 2.6% over the same period.
This downturn is attributed to several factors:
- **Stagnant Real Wages**: Australian real wages have declined nearly 7% from their peak, with forecasts indicating they will remain 6% below peak levels by December 2026.
- **High Household Debt**: Australia's household debt is among the highest globally, with a significant proportion of borrowers on variable mortgage rates. This exposure has made households particularly vulnerable to global interest rate increases, further eroding disposable incomes.
- **Taxation and Inflation**: The combination of bracket creep due to inflation and the expiration of tax offsets has led to higher average personal income tax rates, diminishing net incomes.
The OECD's "Economic Survey of Australia 2026" highlights these challenges, noting that while the labour market has remained resilient, productivity growth has been sluggish, and housing affordability has worsened. The report emphasizes the need for structural reforms to address these issues and enhance economic well-being.
In response to these findings, policymakers are urged to implement measures that promote wage growth, manage household debt, and reform taxation to alleviate the financial pressures on Australian households.
The OECD's assessment underscores the urgency of addressing these economic challenges to improve the living standards of Australians.