By Millie Muroi, Economics Writer
If gross domestic product – better known by its nickname GDP – were a perfect reflection of our quality of life, we would be in trouble.
It’s a rough measure of how much we produce, earn and spend, and it grew a measly 0.1 per cent in the first three months of this year. If our population hadn’t boomed at the same time, Australia would be in recession. In fact, in per-person terms, we’ve actually been going backwards for an entire year.
GDP is a go-to gauge for politicians, pundits and journalists when it comes to our standard of living. Generally, if it’s growing, that’s a good thing. It means we’re producing more, making more money and getting to consume more: all signs of a happy, healthy economy, right? Not necessarily.
GDP reflects the monetary gains from economic activity. But it’s basically blind to any destruction we might cause to the natural environment as we pursue profits and make purchases. And it tells us nothing about how those monetary gains – or income – are shared among the rich and poor.
It also fails to account for all the other things that make life worth living: safety, a sense of belonging and how healthy (not just wealthy) we are, to name a few.
While it’s important to keep an eye on traditional economic indicators, they don’t give us a well-rounded picture of many of the things that matter. Metrics such as GDP, unemployment and inflation can help the Reserve Bank and government make informed choices when steering the economy.
But relying on these indicators alone is like driving down a highway with broken mirrors and shattered headlights. You might be able to see some things, but you’ll miss (and hit) a lot – with some pretty big consequences.
It’s part of the reason the Labor government has been copping heat this week after it decided not to add questions on topics such as sexuality in the 2026 census. Deputy Prime Minister Richard Marles said it was to avoid “divisive” community debate, but many members of the LGBTQ community understandably felt they were being overlooked.
Without solid data, it’s difficult to make policy decisions, particularly for groups that are vulnerable and facing particular challenges. This was a chance to fill one of those gaps.
But the Coalition has no clean record either when it comes to data collection. Shadow Treasurer Angus Taylor has said the government needs to zone in on lower inflation and lower interest rates. Fine. Except that he wants to scrap the government’s “Measuring What Matters” framework to do so.
But the Measuring What Matters framework … matters. It tracks our progress towards a more healthy, secure, sustainable, cohesive and prosperous Australia. That may sound fluffy and abstract. But those five adjectives frame 50 key indicators that make up the wellbeing dashboard, covering everything from air quality to how secure we feel and how healthy we are. It’s a toolkit we can use to fix at least some of the broken mirrors and headlights on our car and develop a more holistic view of our economy.
While it’s important to keep an eye on traditional economic indicators, they don’t give us a well-rounded picture of many of the things that matter.
It’s all about getting the economy to work for people and the planet rather than the other way around.
Dr Cressida Gaukroger, wellbeing government initiative lead at the Centre for Policy Development, says the data doesn’t often swing massively (perhaps one reason why the wellbeing report was largely glossed over by the media last week).
But it’s important because it gets us thinking about the long term, specifically “the changes we should be making now and the investments that we should be making now,” Gaukroger says. This way, we can save ourselves from longer-term problems that might otherwise be ignored in the frenzy around the latest GDP number, for example.
“Without that kind of long-term vision of what we should be aiming for, it makes it very difficult when we’re stuck with short-term election cycles and politicisation of government spending,” Gaukroger says.
So, what did the latest update on this data tell us? Let’s look at the bad news first.
Female health-adjusted life expectancy has dropped. Normally, Gaukroger says, we don’t see much movement in the average number of years a person can expect to live in “full health”. But chronic health conditions are crippling more people. About half of Australians lived with a chronic health condition in 2022 – up from 47 per cent in 2018 and 42 per cent in 2002, with women more likely to be grappling with one.
When it came to the environment, biological diversity worsened. From 1985 to 2020, the abundance of threatened and near-threatened species plummeted by roughly 60 per cent. Biodiversity is important because it ensures balanced and functioning ecosystems.
Some measures of cohesiveness have also deteriorated. In 2023, our sense of belonging fell to a value of 78 – the lowest it has been since 2007, when the measure was benchmarked at a score of 100.
But it’s not all doom and gloom. Other measures have improved, highlighting the areas we are thriving in.
We’re feeling safer walking through our neighbourhoods at night, and more than three-quarters of people in 2023 agreed with the statement that “accepting immigrants from many different countries makes Australia stronger” – up from 63 per cent in 2018.
Gaukroger says another positive development is the decline in “material footprint” per person, meaning fewer raw materials such as fossil fuels and minerals are being extracted to satisfy our demand. While the amount of raw materials being used to fulfil our wants and needs was 37.6 tonnes a person in 2010, the amount fell to 31 tonnes in 2023.
That means we’re working towards a circular economy, which reduces waste by, for example, sharing, reusing, repairing, and recycling things and designing materials that are less resource-intensive to make in the first place. This is a win for the environment.
The Measuring What Matters dashboard is not perfect. As Treasurer Jim Chalmers admitted last week, some of the data is too old, and there are still holes that need to be patched up. But it’s still well worth the investment.
Focusing too heavily on one thing comes at a cost. If we want a well-rounded gauge of our wellbeing and effective policy to drive us to our desired destination, we need to look beyond GDP.