Australia’s newly sworn-in Minister for Industry and Innovation Tim Ayres will need to hit the ground running in the portfolio, with new data showing the manufacturing sector fell into recession during the back end of 2024.
The Australian Industry Group’s (AiGroup) latest Key Industry Indicators numbers make for grim reading, showing that the economy slowed across 2024, and is now in the longest period of low growth since the 1991 recession.
But it is manufacturing that will cause the most immediate concern for the new minister as the sector entered a recession, with output contracting at a 1.7 per cent per annum rate in the second half of the year.
“Apart from petrochemicals, every branch of manufacturing ended the year in recession. Metals were especially weak, posting a 6.4 per cent per annum decline,” the AiGroup said in an update on Thursday.
“Many allied industrials suffered the same fate in 2024, with wholesale trade, mining and construction all posting material output falls over the year.
“By contrast, the strongest industries are in the non-market sectors of education, public administration and health, which all saw significant growth in the year.
“This reflects the ongoing reliance on government spending to prop up the economy, which primarily flows to non-market sectors but not to industrials.”
It’s a grim set of numbers, which also revealed that Australia’s tax-to-GDP topped 30 per cent for the first time in more than 20 years,
All of the growth in the tax take has been due to increases in personal income and company taxes, which in GDP terms have risen by 1.2 per cent and 1.3 perc ent over the past ten years. Other forms of taxation remained stable.
AiGroup said because company and personal income tax falls on productive activities, as their burden rises, the tax system becomes increasingly biased against business investment and employment growth.
Private business investment stagnated throughout 2024, with negligible growth of 0.3 per cent per annum at the year’s end.
This was largely driven by a sharp decline in mining investment over the last 18 months, which has fallen into contraction.
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