A recent article on InnovationAus.com has covered Australian Industry Group’s (AiGroup) latest Key Industry Indicators numbers, showing that the economy slowed across 2024, and is now in the longest period of low growth since the 1991 recession.

AiGroup’s Key Industry Indicators data reveals that the broader economy has seen its longest period of slow growth since the 1991 recession, but manufacturing has been hit hardest, entering a recession, with output contracting at a 1.7% per annum rate in the second half of the year.

The data also revealed that other than the petrochemicals (chemicals derived from petroleum (oil) or natural gas) sector, each industrial sector also faced downturns, with metals suffering the steepest decline at 6.4% annually.

AiGroup’s study identified that several allied industries including mining, construction, and wholesale trade all posted material output falls over the 2024 year. These declines can largely be attributed to the continued reliance on government spending to stimulate the economy, which primarily benefits non-market sectors rather than industrial sectors.

Despite challenges in traditional industries, non-market sectors such as education, health, and public administration—experienced growth, highlighting an increasing dependence on public funding rather than private investment.

At the same time, Australia’s tax-to-GDP ratio climbed above 30% for the first time in 20 years, primarily due to rising personal income and company tax burdens, which have risen by 1.2% and 1.3% over the past ten years. AiGroup warns that these increased company and personal income tax burdens, which fall on productive activities, make the tax system more unfavourable to business investment and job growth.

Private business investment stalled at 0.3% annual growth, largely due to a sustained decline in mining investment over the past 18 months, with the sector now contracting.

This is a challenge for Australia’s newly appointed Minister for Industry and Innovation, Tim Ayres who has big shoes to fill in replacing the well regarded former Minister Ed Husic.

For Minister Ayres, AiGroup’s Key Industry Indicators data highlights the urgent need for policies that support manufacturing and encourage investment in Australia.

The challenge ahead is finding ways to balance government spending with strategies to stimulate growth in productive sectors.

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