Relationship between economic growth, population, government fiscal activity and productivity

Inspect the following graph. See if you can interpret the informaton shown.

https://ajmblogger.com/wp-content/uploads/2026/08/image-3.png

Brief commentary

  • Real GDP rose about 21% from 2016–17 to 2025–26, but population rose about 14%. Consequently, the improvement in real GDP per person is much smaller — only around 6% over the decade. The 2025–26 GDP figure is an estimate rather than a completed-year outcome. ABS national accounts confirm the relatively weak recent growth: real GDP grew 1.5% in 2023–24 and 1.3% in 2024–25.
  • Government payments per person show a very different pattern. They surged during COVID, reaching an index of about 134 in 2020–21, then fell back as emergency programs ended. Nevertheless, by 2025–26 the spreadsheet has real payments per person around 17½% above 2016–17. The underlying Treasury measure is CPI-adjusted government payments per capita.
  • Real tax collected per person has also risen by roughly 17½%. Unlike expenditure, it did not have the same enormous COVID spike; it climbed more steadily, particularly after 2020–21. Tax receipts are estimated at 23.6% of GDP in 2025–26, compared with 21.6% in the spreadsheet’s 2016–17 starting year.
  • Productivity is the standout weak series. GDP per hour worked is only about 1% above its 2016–17 level by 2024–25, after briefly improving during the pandemic period. ABS stresses that labour productivity means real output per hour worked and that the trend, rather than individual annual movements, is what matters.

Implications

  1. Headline GDP growth considerably overstates the improvement experienced per person. Once roughly 14% population growth is allowed for, the increase in output per person is modest.
  2. Government activity has expanded faster than productive capacity. Real payments and real tax receipts per person are around 17–18% higher, while measured labour productivity has barely increased. That does not establish that government spending caused weak productivity, but it highlights a growing mismatch worth investigating.
  3. The COVID spike should not be interpreted as a permanent expansion of normal government services. Much of the 2020–21 peak was extraordinary fiscal support; the more interesting finding is that expenditure per person subsequently settled above the pre-COVID trajectory.
  4. Productivity looks like the central long-run constraint. Population can increase total GDP, and governments can increase spending and taxation, but sustained gains in wages and living standards ultimately require greater output per hour worked. ABS makes that connection explicitly.

References for the spreadsheet

The source sheet I included identifies: Australian Government Budget 2026–27, Statement 11 for historical payments and receipts; MYEFO 2024–25, Appendix E, Table E.11 for real per-capita payments and taxation; ABS National Accounts for real GDP; ABS National, State and Territory Population for population; and ABS productivity statistics for GDP per hour worked. The latest ABS population release reports 27.80 million people at December 2025 and annual population growth of 1.5%.

australia_government_spending_tax_gdp_2016_2026Download

A more readable discussion is found next.

Australia is growing, but are Australians better off?

Australia’s economy is considerably larger than it was a decade ago. But that simple statement conceals a much less impressive story.

Since 2016–17, real GDP has increased by about 21 per cent. Population, however, has increased by around 14 per cent. Once population growth is taken into account, the increase in real output per Australian is only about 6 per cent.

Even more striking is productivity. Output per hour worked has barely increased over the period.

Put these measures beside government taxation and expenditure and an interesting picture emerges.

Australian real GDP, population, real GDP per capita, real government payments per capita, real taxation per capita and labour productivity, 2016–17 = 100]

Sources: Australian Bureau of Statistics, Australian National Accounts; ABS National, State and Territory Population; ABS productivity statistics; Australian Government Budget papers and MYEFO. Author’s calculations. All series indexed to 2016–17 = 100.

Growth looks different per person

GDP is useful for measuring the size of an economy, but it is a poor measure of whether the average person’s economic circumstances are improving.

Australia illustrates the distinction particularly well.

Real GDP increased substantially over the decade, but so did the number of people sharing that output. The gap between the GDP and population lines on the graph therefore matters more for living standards than the GDP line by itself.

Real GDP per capita increased only modestly.

This does not mean Australians are only 6 per cent “better off”. GDP per capita is not a complete measure of welfare. It says nothing directly about the distribution of income, housing costs, environmental quality, unpaid work or the quality of public services.

But it does tell us that much of Australia’s headline economic expansion has come from having a larger population rather than producing dramatically more for each Australian.

Government grew faster

The government figures tell another part of the story.

Real Australian Government payments per person rose sharply during COVID as extraordinary support measures were introduced. That spike subsequently unwound, as it should have.

More interesting is where expenditure settled afterwards.

By 2025–26, real government payments per person are roughly 17 per cent above their 2016–17 level.

Real taxation per person has followed a different path but arrives at a remarkably similar result: approximately 17 per cent higher than in 2016–17.

This should not be interpreted as demonstrating that increased government spending caused Australia’s weak productivity performance. The graph establishes no such causal relationship.

It does, however, raise a legitimate public-policy question.

Australians are contributing substantially more tax per person in real terms and governments are spending substantially more per person. What additional economic and social outcomes are we receiving for that increased commitment of resources?

That is a question worth asking regardless of one’s political persuasion.

Productivity is the problem

The most concerning line on the graph is perhaps the least dramatic visually: labour productivity.

Output per hour worked is barely above where it was in 2016–17.

Productivity matters because sustainable increases in real wages and living standards ultimately depend heavily on our ability to produce more value from each hour of work.

Population growth can make GDP larger. Higher commodity prices can increase national income. Governments can tax and redistribute income.

None of these, by themselves, ensures continuing improvement in living standards.

Productivity growth provides something fundamentally different: the capacity to produce more without simply requiring proportionately more labour.

Australia has struggled to achieve that.

The unusual movements during the pandemic should also make us cautious about reading too much into individual years. Changes in the composition of employment and hours worked temporarily affected measured productivity. The longer trend is much more important.

And that trend is weak.

The question we should ask

Political debate frequently focuses on whether GDP is growing, whether government spending should increase or decrease, and whether taxes are too high or too low.

Perhaps these are not the most useful starting questions.

A better question may be:

What additional value are Australians receiving from the additional resources being used?

If population rises substantially but GDP per person barely moves, economic growth alone is not enough.

If taxation and government spending per person rise substantially but productivity barely changes, simply arguing about the size of government misses an important part of the problem.

And if productivity remains stagnant, governments eventually face increasingly difficult choices between taxation, services, deficits and household living standards.

Australia has certainly grown during the past decade.

The more important challenge is ensuring that the next decade produces substantially more growth per Australian and per hour worked, rather than simply a larger economy.

Context of Bjorn Lomborg claims

Bjorn Lomborg is ignoring some important context.

He is correct in pointing out that a major scientific study concluded that global burned area has decreased by about 25%. Much of this decline has occurred in grasslands in Africa and other savanna regions, due largely to changing land use and the expansion and intensification of agriculture.

What he fails to mention is the increase in extreme, dangerous and costly fires, examples of which we continue to see in Canada and elsewhere.

Some basic information:

  • Extreme wildfire frequency: increased 2.2 times since 2003.
  • Insured wildfire losses: increasing by about 12% per year over the long term.
  • 2024–25: global area burned was 9% below average, yet fire carbon emissions were 9% above average.
  • 2025 Los Angeles: California’s total area burned was below its 10-year average, yet the LA fires became the world’s costliest insured wildfire event.

So Lomborg is correct in one sense, but ignores other evidence pointing to the damage being done.

Increasing greenhouse-gas emissions slow the rate at which heat escapes to space, warming the climate. Higher temperatures increase evaporation and, in many regions, contribute to hotter and drier fire weather. This does not mean climate change causes every fire. It means that when the other ingredients for fire are present, climate change can increase the conditions that allow fires to become extreme.

Less area burning globally does not mean the risk from extreme fire is decreasing. They are two different measures.

Some sources to review

Cunningham, Williamson & Bowman (2024), Nature Ecology & Evolution, “Increasing frequency and intensity of the most extreme wildfires on Earth.”

Burton et al. (2024), Nature Climate Change, “Global burned area increasingly explained by climate change.”

Andela et al. (2017), Science, “A human-driven decline in global burned area.”

State of Wildfires 2024–2025, Earth System Science Data.

Note: AI assistance was used in researching this article. Data and claims were checked against the cited original sources. For the most the wording and conclusions are my own.

Upper Estimate of Solar Costs Australia by 2050

Note: the land estimate is just for the replacement of home electricity.

NESF is said to generate 6PJ (I think this is an overestimate for a few reasons) but let’s go with that. Thus 2000 hectares for each, need 5500PJ/6Pj = 916.

916 * 2000hectares each= 1832000 heactars * 2.4 = 4,396,800 acres.

Extra costs are upgrades to Transmission – hard to know say $20B, and 3% maintenance per year.

Solar can be upgraded easily and there is no digging up and transportation, which reduces the amount of energy needed by around a further 15%.

The idea would be to obviously not do everything with Solar but to use some proportion of wind, hydro and biofuel.

Nuclear in the future could be used if the technology develops re: SMRs, and can be shown to work well, be cost effective etc.

Gas would still be needed to power very temperature manufacturing and for export for same process overseas.

Coal production and consumption domestically will reduce over time, but exports may continue for longer. The big problem for Australia is long-term replacement of coal export income, hence the need for new industries.

Spread Sheet click link below

solarcostDownload

Frogs & Koalas

  1. The Southern Corroboree Frog

Habitat

Frog and eggs

Location – Southern High Lands

Distribution

Very few live in wild

Maybe 300-400 bread in zoos

Large Population during 1970s

Habitat is 3000feet (1200 m)

Spagnum moss

Toronga Zoo breading program

disease (Chytrid fungus)

Skin keratin attacked, hard to maintain slat balance

And electrolytes, heart attach. Skin is used to breath

Heat and cold, fires

Female and male same colours

Female a little larger (30cm to 28cm)

2. Koalas in the You Yangs

Project: You Yangs Little River Koala Link

3. Recovery of Species World Wide

Australia v Sweden Covid

Sweden’s raw death rate is abut 24,000 and Australia’s 20,000, Sweden’s population is 10m and cases 2.5m on either proportion Sweden’s has vastly higher death rate.

There is a lot of noise in sections of the media about significant difference in excess deaths, which is attributed to the different approach, the implication being Sweden has done vastly better.

A simple review of the facts simply do not support that thesis, and what’s more both do vastly better than most other countries.

I thought I might use the data in my teaching. The relative comparison of Australia and Sweden does not confirm that Sweden performed better. The actual death rate is higher compared to Australia and the excess death comparisons don’t suggest a major difference especially compared to the rest of the world.
The Australian via Crichton, The Herald via Bolt et al. constantly try to suggest this Sweden line but they don’t in my view know what they are talking about.
I have accessed the base data and have copied and the sources.
Personally, I ignore most media reports as they don’t try to report dispassionately and always have a bloody angle eg Fox in the US and Sky here.


Australia
Pop = 25.7m

Proportion of deaths
Deaths/cases = 20000/11300000 = 0.001

Excess Deaths 2022 ~ 20000 (15% over long term)

Sweden


Pop = 10.4 m

Proportion of deaths
Deaths/cases = 23928/2700000 = 0.008

See graphs below

 
OECD most recent roughly 6% v 3%, whilst Sweden best, Australia compares well with the rest.

Different data set and methodology for balance, data March 2023, here we see reversed result but both Australia and Sweden do well in comparison to rest.

 


Graph show the % excess deaths, Sweden has peaked and dropping, Aust recent data not available to me. The graph does not seem to support the idea there is a major difference between Sweden and Australia. If anything Sweden has some very high early peaks.


Australia Constitutional Change

There is no dispute about recognition.

There is about The Voice, some reasonable about clarity and will it make a difference.

Marcia Langton has stated that The Voice will ensure advice is transparently tabled in Parliament, no more lost and ignored reports from the myriad of committees. This seems like a sound reason to support The Yes case.

Amazing what chatgt can come up with; seems to get to the points of the matter.

The arguments in favor of recognizing Aboriginal and Torres Strait Islander peoples in the Australian Constitution include:

  • Acknowledgment of Australia’s history: Recognition in the Constitution would acknowledge the history of Indigenous Australians and their long-standing connection to the land.
  • Addressing past injustices: It would recognize the injustices and harm caused by policies such as forced removal of children from their families, and promote reconciliation between Indigenous and non-Indigenous Australians.
  • Advancing Indigenous rights: Recognition could help protect Indigenous rights, and promote greater self-determination and decision-making power for Indigenous Australians.
  • Strengthening the nation: Acknowledging Indigenous Australians in the Constitution would contribute to a sense of national unity and pride, and enhance Australia’s reputation as a fair and inclusive society.
  • Supporting treaty negotiations: Constitutional recognition could facilitate the negotiation of treaties or other agreements between Indigenous and non-Indigenous Australians, providing a foundation for greater cooperation and mutual respect.

The Voice to Parliament refers to a proposed advisory body to the Australian Parliament that would represent the interests of Indigenous Australians. The arguments against the Voice to Parliament include:

  • It is seen as potentially divisive: Some argue that creating a separate representative body for Indigenous Australians could create division and resentment among the broader population. (this is possible, especially if the place of indigenous people is not acknowledged)
  • It is seen as unnecessary: Critics argue that Indigenous Australians already have various representative bodies, such as the National Congress of Australia’s First Peoples, and that creating another advisory body would be redundant. (possible point, but there is no reason why this should be the case, taking on-board Langton’s comment, it is likely to improve effectiveness and efficiency of advise getting actioned or at least formally dealt with.)
  • It could undermine the principle of equality: Opponents argue that creating a separate advisory body based on race could undermine the principle of equality and lead to calls for other groups to have their own representative bodies. (again, possible, but there is inequality now, dignity is lacking, there is no veto power not mandatory nature of advice, it is to give a rightful place to indigenous peoples, not as separate but as privileged as ‘here first and disposed’, about self-esteem.)
  • It may have limited impact: Some argue that the proposed advisory body may not have enough power or influence to effect meaningful change. (yes, possible but it would not be able to be hidden as easily)
  • It could be used as a political tool: There are concerns that the Voice to Parliament could be used by politicians for their own purposes, rather than to represent the interests of Indigenous Australians. (so what)

The arguments in favor of the Voice to Parliament, or an advisory body to the Australian Parliament that would represent the interests of Indigenous Australians, include:

  • Ensuring Indigenous voices are heard: The Voice to Parliament would provide a formal channel for Indigenous Australians to have their voices heard in the national policy-making process.
  • Promoting greater self-determination: The proposed advisory body would help promote greater self-determination for Indigenous Australians, giving them a say in decisions that affect their lives.
  • Enhancing decision-making: The Voice to Parliament would bring a valuable Indigenous perspective to the policy-making process, promoting more informed and effective decision-making.
  • Addressing historical injustice: The proposed advisory body is seen as a means of addressing historical injustices and recognizing the ongoing impact of colonization on Indigenous Australians.
  • Strengthening democracy: The Voice to Parliament would enhance democracy by ensuring that all Australians have a say in the decisions that affect them, regardless of their background or ethnicity.

Comment of the US temperature data

The following graph was published and the source is wattsupwiththat.com

It is a snapshot from June 2005 to May 2022, taken from data available at the US Climate Reference Network: ref: https://www.ncei.noaa.gov/access/crn/qcdatasets.html

Using the same data I have constructed the same graph – verified.

At first, glance that looks like a 15-year pause.

Research Question: Is it reasonable to conclude that there has been no increase in temperature in the USA since 2005, and what if anything can be said about the worldwide situation?

Based on the trend shown in the graph from 2005 it looks like there is an upward trend – see the higher highs, see the bunching effect near 2015-2022, but maybe I see incorrectly – biased.

Time series are hard to study. There are often trends that are hard to see.

One thing to do is consider a moving average and look at the yearly trend.

If we do this a trend is easier to spot. The lower average temperatures are increasing and the time period is shorter.

The top is fluctuating, much like the first graph. But you will notice that the trend line shows a positive gradient (i.e. the number in front of x)

The UAH is satellite reconstruction by Dr Spence and RSS is via a private firm. You notice the key thing is that they agree.

This is not a trick it is a simple well-used method to detect trends.

It is very clear there is an upward trend.

The full set of data from 1900 shows the entire trend.

This graph captures nicely the way the average has moved upward over time.

Initially, it was low, then there was a jump and then a fall and plateau and then a gradual rise.

Let’s look at some other indicators

These can be found at https://www.epa.gov/climate-indicators

  1. High and Low temperature pattern

What you will notice is these are both increasing and Min more it is more than Max. This is exactly what has been stated by climate science.

  1. Heat Extremes

The trend is clear, extremes of heat is increasing.

  1. Seasonal patterns

As I said earlier a time series is hard to study. A time series of data is made up of the raw data + trends + seasons + errors.

What is shown above is the seasonal data. Winter shows a clear trend.

In conclusion

I have recently completed a study of the time series data for the Arctic Sea Ice Extent ie how much ice there is at any point in time. The data is derived from Satellite readings since 1978. The basic finding is that the amount of the max sea ice has fallen from 16mk^2 to 14mk^2. It will get published in due course.

Back to the original research question. I think it is clear the original graph on its own does not present sufficient evidence that (a) warming is not or has not occurred in the US and (b) it says nothing about the world.

There is also much discussion on blogs about Urban Heat Island (and airports). The data that you see is adjusted to these effects. Raw data suggests a significant bias, which is why it is removed. Much of what humans do is set around bias either personal or hidden in the data. For this reason, researchers spend a lot of time detecting and removing it.