Australia's collective wellbeing has not improved for two years as the economy lumbers in the aftermath of the mining boom.
The Fairfax-Lateral Economics Wellbeing index, which uses a range of components to measure changes in national welfare, put the value of Australia's wellbeing at $364.8 billion in the June quarter.
While that was 1.1 per cent higher than in the first quarter of this year, it was not enough to lift the index above where it was in mid-2013. The index shows that national wellbeing was in decline in the months before the Abbott government was elected – two years ago on Monday – and has been stagnant ever since.
The wellbeing index provides a fuller measure of national progress than traditional economic measures such as gross domestic product.
One factor dragging on the index recently has been weak growth in net national income, a key component of wellbeing. It grew strongly in the years before the 2011 peak in the mining boom.
But since then, a decline in the terms of trade – the prices Australia receives for exports relative to the prices it pays for imports – has taken a toll on national income. The national accounts released by the Bureau of Statistics on Wednesday showed real net national income per head fell 1.2 per cent in the June quarter, the biggest slide since the global financial crisis.
The drag on wellbeing caused by falling national income was offset in the June quarter by a solid increase in human capital – a measure of collective know-how.
One reason for this was an increase in the proportion of adults with a higher qualification. The report says close to 60 per cent of those aged between 20 and 64 years now have a post-school qualification (defined as Certificate III level or above). A decade ago the proportion was just 47 per cent.
The report's author, Dr Nicholas Gruen, said Australia's investment in know-how would pay long-term dividends.
"As our national income falls away as a result of falling terms of trade, we're continuing to invest in human capital which is seeing us lay strong foundations for the post-mining-boom economy," he said. Since its launch in 2011, the wellbeing index has drawn attention to the value of human capital and its importance to Australia's collective wellbeing.
The index's health component includes a range of factors to estimate the wellbeing impact of changes in Australia's health. It showed the wellbeing cost of obesity and untreated mental illness outweighed positives such as longer life expectancy and preventable hospitalisations in the June quarter.
The cost of obesity to Australia's collective wellbeing reached $131.3 billion in the year to June, which was 5.8 per cent higher than the previous year. The annual wellbeing cost of untreated mental illness reached $196.4 billion, up 1.9 per cent on the previous year.
Index components on environment, work satisfaction and inequality were also a modest drag on collective wellbeing in the June quarter, and over the year.
Quarterly GDP figures released on Wednesday showed the Australian economy barely grew in the June quarter, expanding only 0.2 per cent, and 2 per cent over the year.
