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Economy of the Australian Capital Territory
View of Canberra, primary economic centre of the Australian Capital Territory
CurrencyAustralian Dollar (AUD)
1 July 2018 - 30 June 2019
Statistics
GDPIncrease A$39.44 billion (2017-18) (real)[1]
GDP growth
4.0%[1]
GDP per capita
Increase A$94,831
GDP by component
Government spending: 51.7%

Household consumption: 38.2% Investment: 11.1%

Net exports: -1%
1.8%
1.5% (nationally set by RBA)
Labour force
236,500
Unemployment3.6%[2]
A$91,336 yearly[3]

Title of page: Economy of the Australian Capital Territory

The economy of the Australian Capital Territory (ACT) is the fastest-growing, sixth biggest economy of Australia as of the end of the 2017-18 financial year.[4] Since the introduction of its self-government status in 1989, and with few exceptions in 1992, 1996, and 2014, the ACT economy has exhibited positive growth at a 1991-2018 average of 3.17 percent per year.[1] A vast majority of the economy is concentrated in Canberra, the capital city of Australia, and is composed primarily (about 75%) by service industries, particularly those related to the administration of federal and local government. Construction also contributes to an important part of the economy, boosted by large government-funded projects and an active residential market. In contrast to other Australian states and territories, primary sectors such as agriculture, forestry, and mining, represent a very small proportion of the economy (±1%).[5][6]

As of March 2019, the ACT exhibits the lowest unemployment rate at 3.6 percent, with almost a third of workers being employed in the public sector.[7] Inflation in has been slightly greater than the national rate since mid 2017, reaching 1.8% in the year to Q1 2019.[8] As per the 2016 census, median weekly personal income was A$998[9], while in 2017-18 total yearly disposable income per capita in was A$91,336.[10]

Main Economic Indicators

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Gross State Product

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Not to be confused with Gross domestic product.

In the 2017-18 financial year, ACT real gross state product (real GSP) was 39.44 billion dollars, which represented a 4.0% increase over the previous year. From 1990 to 2018, average real GSP yearly growth has been 3.17%, ranking 4th among all Australian jurisdictions. Real GSP per capita in 2017-2018 was $94,831, a 1.8% increase over the previous year. Nominal GSP in 2017-18 reached 39.79 billion dollars, and $95,674 per capita. Overall, the ACT account for 2.2% of the national economy as of 2018 (a figure that has averaged 2.05% from 1990-2018).[1][6]

As of 2017-18, approximately 51.7% of ACT real GSP is composed by government expenditure and public gross fixed capital formation, 38.2% by household consumption (which figure includes transfer payments), 11.1% by private gross fixed capital formation (i.e. private investment), and negative 1% by net exports.[11] Main three industries by gross value added are public administration and safety (25.9%), health care services (11.0%), and professional, scientific and technical services (8.7%).[6][12]

 
1990-2018 Real GSP of the Australian Capital Territory
Selected ACT output measures[1]
2017-18

(in AUD)

2017-18 annual growth 1991-2018 average growth
Real GSP $39.44 billion 4.0% 3.17%
Real GSP per capita $94,831 1.8% 1.73%
Real GSI $39.45 billion 4.0% 3.38%
Real GSI per capita $94,853 1.8% 1.97%
Nominal GSP $39.79 billion 4.9% 5.97%
Nominal GSP per capita $95,674 2.7% 4.46%

Employment

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Approximately 227,900 persons are employed in the ACT as of March 2019[13], about 63.5% of whom are full-time workers.[9] As of the 2016 Census, professionals represented the largest proportion of workers (30.5%), followed by clerical and administrative workers, and managers. In terms of industry of occupation, over 30% are employed in public service jobs (including defence and safety), followed by health care and social assistance (10.4%) and education and training(9.6%). Between 2015-19, unemployment rate has averaged 4.08%.[14] By Q1 2019, 3.6% of the 236,500 labour force remained unemployed.[7]

Inflation and personal income

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Inflation in Canberra (applies for the ACT[15]) rose by 0.1% in the first quarter of 2019, based on CPI changes from previous quarter. Year on year, CPI increased by 1.8% (by comparison, Australia rate of inflation was 1.3%).[15] In June 2018 total yearly disposable income per capita in the ACT was A$91,336, with an average growth of 5.2% in 1990-2018.[10]

Wages and salaries grew by 0.3% (quarterly) and 2.0% (year-on-year) as measured by the December 2018 wage price index (WPI), ranking the ACT wage growth second-weakest among all Australian jurisdictions. Such a low performance is the result of a sluggish WPI growth in the private sector.[8]

In 2016, mean household net worth was A$875,482.[3]

Personal Weekly Income (2016)[3]
Earnings per week Percentage of population
$1-$499 19.2
$500-$999 19.1
$1000-$1999 30.9
$2000-$2999 10.9
$3000 or more 4.6
nil income 7.9
negative income 0.3

Property market

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Median house prices experienced a 2.0% fall to A$685,000 through the year to March 2019, while median unit prices increased by 4.5% to A$459,900. Overall, median residential property prices increased by 0.9% to $532,000 over the same period.[16] Such figures echoed a housing market downturn in Sydney, Melbourne and Perth that started in mid 2018.[17] From 2014 to 2019, house and unit median prices grew by 26.9% and 7.0%, respectively.[16]

 
Residential area at Dickson, Australian Capital Territory.

Number of dwelling unit commencements in Q4 2018 was 1,290, well above the 651 figure from a year before, ranking the ACT above all Australian jurisdictions by this measure.[18] In 2017-18, residential building approvals were valued at A$1.7 billion, an all-time high since 2008-09. Non-residential building approvals stood at $1.3 billion, considerably below the $1.8 billion 2008-09 peak but still well above the A$0.6 billion trough in 2011-12.[19]

Business climate

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Coffee shops at Manuka, Australian Capital Territory.

By 2016-17, non-employing businesses and businesses employing 1-19 employees jointly constituted 87% of the total 27,371 businesses in the Australian Capital Territory. In the same fiscal year, net increase in the number of businesses was 1,235, the largest increase since 2013-14.[3] As of 2017-18, business counts grew by 4.4% to 28.566.[20]

Sectors and Industries

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Agriculture and forestry

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With a total land area of 2,431 km2, agriculture activity in the ACT employs approximately 15% of the territory, or 370 km2, as of 2017. Agricultural output in 2016-17 was valued at 11 million, which represented a very minor proportion (<1%) of ACT total GDP (A$37.9 billion)[1] and Australia's agricultural production (A$61 billion).[21] Cattle and calves, wool, sheep and lambs are the main components of agriculture activity, jointly accounting for 60% of total production of the 36 farms in operation as of 2016-17. [6][21]

 
A graphic description of land use in the Australian Capital Territory, prepared by the Department of Agriculture and Water Resources (Australia)

Construction

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In 2017-18, construction industry in the ACT accounted for 6% of its GSP, or gross value added of A$2.4 billion.[6] Large construction projects have provided the ACT economy with important stimulus since 2017.[22] There were about 13,200 workers in this industry in 2016, or 5.8% of the ACT employed labour force. The number of construction businesses has consistently increased since 2015-16, with a total of 5,512 by June 2018. 39 percent of firms in this industry generated between A$200,000 and A$2 million in 2017-18.

Public administration and safety

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View of Parliament House. Several federal government buildings and other public organisations are based in Canberra.

The public sector is the main driver of economic performance in the ACT, as the largest portions of both employment and economic value are sourced from it.[22][23]

In 2017-18, 25.9% of ACT GSP was made up of public administration and safety, by gross value added.[6] Total GVA of this sector reached A$10.3 billion in the same year. Public sector jobs have been on the rise since 2001, growing by 70% between 2001-2016, the largest growth in employment by occupation in the ACT.[23] As at 2016, almost a third (30.8%) of ACT workers were employed in the public sector[3]. Due to the large dependency on its public sectors, the ACT economy is volatile to changes in government spending, with the biggest economic contributions and detractions in final state growth coming from it. Such economic risk, however, has been partially offset by small agriculture and mining sectors.[24][23] In 2014, large-scale cuts in public service jobs,[25] in conjunction with low levels of household consumption, reduced economic stimulus in subsequent years.[22][23]

Health care and social assistance

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About A$4.4 billion (11%) was contributed to ACT GSP by health care and social assistance in 2017-18, thus being the second largest industry in the state.[6] There were 23,980 persons employed in this industry by 2016, which accounted for almost 11 percent all workers. [26]

Semi-universal health services access in Australia, in conjunction with an ageing population and technological advancements, has increased the volume of activity in this sector. Although health services in the ACT are small in comparison to other states and territories, government spending in this industry between 2007 and 2012 averaged a 10.3% grow per year (and 4.1% from 2012 to 2017).[27][24]

References

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  1. ^ a b c d e f ABS, Australian Bureau of Statistics (2018). "Australian National Accounts: State Accounts, 2017-18 'Table 1. Gross State Product, Chain volume measures and current prices', time series spreadsheet". Australian Bureau of Statistics. Retrieved 28 April 2019.
  2. ^ ACT, Chief Ministry, Treasury and Economic Development (May 2019). "Economic Indicator Summary, ACT and Australia". ACT Economic Indicators. Retrieved 10 May 2019.
  3. ^ a b c d e ABS, Australian Capital Territory (2017). "Australian Capital Territory (STE) (8)". Australian Bureau of Statistics. Retrieved 11 May 2019.
  4. ^ ABS, Australian Bureau of Statistics (2018). "5220.0 - Australian National Accounts: State Accounts, 2017-18 (Analysis of Results)". Australian Bureau of Statistics. Retrieved 17 May 2018.
  5. ^ "Australian Capital Territory | Flag, Facts, Maps, & Points of Interest". Encyclopedia Britannica. Retrieved 2019-05-15.
  6. ^ a b c d e f g ACT, Chief Ministry, Treasury and Economic Development (2018). "Gross State Product – 2017-18". ACT Economic Indicators. Retrieved 10 May 2019.{{cite web}}: CS1 maint: multiple names: authors list (link)
  7. ^ a b ACT, Chief Minister, Treasury and Economic Development (March 2019). "Labour Force - March 2019". ACT Economic Indicators. Retrieved 11 May 2019.{{cite web}}: CS1 maint: multiple names: authors list (link)
  8. ^ a b ACT, Chief Minister, Treasury and Economic Development (December 2018). "Wage Price Index – December Quarter 2018". ACT Economic Indicators. Retrieved 11 May 2018.{{cite web}}: CS1 maint: multiple names: authors list (link)
  9. ^ a b ABS, Australian Bureau of Statistics (2016). "2016 Census QuickStats". Australian Bureau of Statistics QuickStats. Retrieved 11 May 2019.
  10. ^ a b ABS, Australian Bureau of Statistics (2018). "Australian National Accounts: State Accounts, 2017-18 'Table 19. Household Income Account and Per Capita, Australian Capital Territory: Current prices'". Australian Bureau of Statistics. Retrieved 28 April 2019.
  11. ^ ABS, Australian Bureau of Statistics (2018). "Australian National Accounts: State Accounts, 2017-18 'Table 9. Expenditure, Income and Industry Components of Gross State Product, Australian Capital Territory, Chain volume measures and current prices'". Australian Bureau of Statistics. Retrieved 28 April 2019.
  12. ^ EDA, Economic Development Australia (2018). "Output - Australian Capital Territory - Economic Development Australia – ACT". Economy Profile (EDA). Retrieved 2019-05-09.
  13. ^ ACT, Chief Ministry, Treasury and Economic Development (May 2019). "Economic Indicator Summary, ACT and Australia". ACT Economic Indicators. Retrieved 10 May 2019.
  14. ^ EDA, Economic Development Australia (April 2019). "Australian Capital Territory - Trends: Unemployment rate". EDA Economy Profile. Retrieved 11 May 2019.
  15. ^ a b ACT, Chief Ministry, Treasury and Economic Development (March 2019). "Consumer Price Index (CPI) – March quarter 2019". ACT Economic Indicators. Retrieved 1 May 2019. Through the year to the March quarter 2019, the primary contributor to price growth in the ACT was...{{cite web}}: CS1 maint: multiple names: authors list (link)
  16. ^ a b ACT, Chief Minister, Treasury and Economic Development (March 2019). "ACT Residential Property Market, March 2019". ACT Economic Indicators. Retrieved 11 May 2019.{{cite web}}: CS1 maint: multiple names: authors list (link)
  17. ^ RBA, Reserve Bank of Australia (2 April 2019). "Minutes of the Monetary Policy Meeting of the Reserve Bank Board". RBA - Monetary Policy, Minutes. Retrieved 11 May 2019.
  18. ^ ACT, Chief Minister, Treasury and Economic Development (December 2018). "Dwelling Unit Commencements ― December Quarter 2018". Retrieved 11 May 2019.{{cite web}}: CS1 maint: multiple names: authors list (link)
  19. ^ EDA, Economic Development Australia - ACT (2018). "Australian Capital Territory - Building Approvals". EDA Economy Profile. Retrieved 11 May 2019.
  20. ^ EDA, Economic Development Australia - ACT (2018). "Business Counts (Turnover) - Australian Capital Territory". EDA Economy Profile. Retrieved 14 May 2019.
  21. ^ a b ABARES, Department of Agriculture and Water Resources (2019). "About my region - Australian Capital Territory". ABARES: Research topics. Retrieved 14 May 2019.
  22. ^ a b c "The ACT economy still going strong | Dixon Advisory". www.dixon.com.au. Retrieved 2019-05-14.
  23. ^ a b c d NAB Group Economics, National Australia Bank (2016). "State Update: Australian Capital Territory– January 2016" (PDF). NAB outlooks. Retrieved 15 May 2019.
  24. ^ a b Access Economics Pty Limited, AE (2008). "The ACT and its region: economic relationships and key drivers of economic growth" (PDF). Chief Minister Department data. Retrieved 15 May 2019.
  25. ^ "Canberra urged to 'hold its nerve' over public service cuts". ABC News. 2013-11-12. Retrieved 2019-05-15.
  26. ^ EDA, Economic Development Australia - ACT (2019). "Australian Capital Territory - Employment by Industry". EDA Economy Profile. Retrieved 15 May 2019.
  27. ^ Stanhope, Khalid Ahmed and Jon (2019-03-30). "The ACT government is shrinking health spending year on year". The Canberra Times. Retrieved 2019-05-15.

See also

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