Australia Should Be a Failure. Why Isn't It?

Australia's biggest export is natural resources, and as we have talked about on the channel many times, this isn't always a great thing for an economy. Resources don't provide much value to the local economy, especially in Australia where mines are thousands of miles from residential centres, and they don't employ all that many people for the massive wealth they create. Australia lags far behind technological centres like the US, but somehow has a strong economy. How has it done this and what can we learn from a country that just digs holes and builds homes?

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[indoman]

I am an Australian who has said for years that we have an economy that is a mirage. We have a first world standard of living based on a thrid world economy, because we do two things well, mining and farming. We do very little down stream value adding to our mineral exports, our manufacturing industry has moved overseas and we are way too beholden to China. This along with a gormless / spinless political class, too frightened to tackle problems in the tax system, despite numerous reports highlighting what needs to be done, let alone take on the multinationals, will lead to disaster one day. Selling minerals and farming products to other countries and flicking over priced houses, which our young people can’t afford, to one another is not the basis for long term economic success. China has already shown it can throttle us at will, as shown with the bans various products three years ago, although they did leave our biggest export, iron ore alone for the time being. That will change when the iron ore mines in West Africa, in which they have considerable ownership, come online in the not too distant future. Here we are, bowing and scraping to them to lift the bans on beef, wine and lobsters, it can only be imagined what we will do, if they move away from our major primary product exports. To me, we are living in a fools paradise and if we don’t get the cost of housing under control, our much vaunted political stability could very well go out the window. Australia is just as susceptable to political populism as any where else in the world.

[CameronFussner]

My greatest concern is how to recover from all these economic and global troubles and stay afloat especially with the political power tussle going on in Australia.

[TheBeriney]

As a 25 year old Aussie from the bush who's paying 42% of their after tax income for a Sydney Rental, this video has quite the disheartening ending

[nicksmith]

As someone who lives in Australia (In Melbourne the second largest city), I think the best way to describe most people on the average wage especially if they're under 40 is: Asset rich but cash flow poor. Housing is extremely unaffordable now but people are still willing to pay $1 million for an Australian house and go well over the 30% recommended mortgage payment out of their salary to get in the market.

[Ratgibbon]

Housing shouldn't have been allowed to become the wealth builder to the degree it is currently. Not just in Australia, but in many developed countries around the world.
It's a non-generating asset so it contributes very little to economic growth and because it puts a large financial burden on the younger generation there's less left in their pocket to spend and thus keep the economy spinning. It's a double whammy, really.

[VARMOT]

It is a mineral rich country with top exports such as iron ore and coal . They did a good job to not fall into the resource curse trap

[keithwagg]

I’d say that the housing situation in Australia is a complete failure. People who have worked all their lives facing homelessness in retirement! Most people renting will never be able to buy a home. I remember walking around the cities as a kid and maybe once saw a homeless person, lucky even you don’t see one on every block now. There has been a collapse in opportunities and living standards for the next generation.

[harrybuttery]

Australia is mainly a consumer economy as well so exports don't really play such a huge part in our economy as compared with most other nations.
Australia has an export ratio of 22.1% of GDP ranking us 140th in terms of countries export to GDP ratio.

Additionally, Australia imports only 17.8% of our GDP meaning we are ranked 169 for Import to GDP.
This also means we are a net exporter rather than importer.

So in all the Australian Economy is actually quite insular(which explains why we avoid recessions) and relies mostly on internal consumerism.

[ReymerzZ]

As an australian this brings to home the fear that although lucky, we are living on a massive house of cards.
I think this feeling is more widespread that I first believed.

[yanakaizzz]

As an Aussie I can say that getting through the great bottleneck is the only pursuit left to me. I realised during lock down just how important it is for me to achieve home ownership and I also recognised that the lack of industry here is a serious concern for everyone (not just the folks living more or less week to week like I do...). SO, I have a dream to create jobs. I have a plan too. But I keep getting setbacks which sting allot as rent rose to buffer our landlords from inflation. So when I needed to move house and give up my full time job in place of a casual job which I was then made redundant from I found myself watching the ball roll all the way back down that hill again.

For context: I am a single male close to 30 with a high school/college education and some industry experience with some licenses. I'm divorced, I pay rent, I actually pay tax and my situation feels somewhat hopeless. If only the mining magnates we "elected" didn't choose to sell off our country and not build industry, otherwise we could be allot more like Germany or heck even take a play or two from Texas.

Advice welcome :l

[IKEMENOsakaman]

My tutor once summed up our Economy in the following sentence "we are a first world country with a third world economy and a bunch of rich people on the coast just buying houses off each other to feel richer".

Seems like that also summarises your video hahaha
Great stuff as always, from a fellow Aussie!

[davieejeffreys]

Australian housing has always concerned me, I worked in the industry for 30 years and did very well out of it, but we really have gone too far, Governments addicted to stamp duty, massive subdivision regulation, therefore even pumping prices 40 km from Melbourne CBD and even regional ..
Banks also, are basically property plays, Iron Ore makes sense, Australian property does not . Governments say they will address " affordability " but in essence they just DONT . How is a young person going to get a house ? If not born in the top 10 % or via inheritance ?

[MarktYertd]

"I hold the view that Australia, Norway, and Canada are the only nations that have achieved balanced growth leveraging their natural resources. However, overreliance on raw materials can be detrimental since resources are finite, and sustained growth may diminish, posing the risk of a significant downturn, similar to the experiences of Argentina, Zimbabwe, and Nauru."

[divjotchahar]

A lot of Australia's problems sound quite similar to Canada's, absurd housing market which if you can afford to get into is a mistake not to get into, stagnant GDP per capita growth, lots of immigration and study visas

[haweater]

6:50 Australia's government has failed to tax the resource wealth because the owners that would be taxed are too influential in government to let it happen.

[davidbrayshaw]

Any economy that leaves the children of that economy essentially destitute is not a good economy, by any metric. Australia's economy has been so grossly mismanaged from the 90's on
that it would seem that there is no turning back. That said, however, I would like to thank the families whose forefathers built the nation, its infrastructure, paid taxes year after year and fought wars to maintain Australia's sovereignty. Your family's efforts and achievements might be forgotten by governments and economists alike, but they are not forgotten by me.

[megaspeeder]

As an Australian who left the country for Spain before the 2007 crisis and is now graduating from university, this video left me with a lot of mixed feelings in regards to going back.

[michaelhurley]

As an American, Australia is one of my favorite countries. The people seem to be friendly, the world's best beaches and beautiful outback. Good luck and love from USA!

[darnell]

Housing in Au is ridiculous. You have one old man living in a 2-level 4-bedder with a massive backyard and all he'll do is sit on the couch, lay in bed, shower, toilet, and cook on a stovetop. Of course he'll be mowing the lawn and vacuuming too, but he wouldn't have to if he wasn't responsible for all that maintenance. You can walk through a whole suburb and not run into another person, no kids playing in the street, and you'll pass like one 7-11 or something, that's all they got there. And then they wonder why nobody can find a home.
I figure I could live in a space 2.5m x 5m, so basically a parking spot. That's a more flexible footprint than someone in a narrow van or small houseboat. But that type of space just doesn't exist. You need to buy half an acre in the middle of nowhere.

[tomasbeblar]

Swap the word Australia with Canada and the whole video is still accurate.