Sharp jump in incomes

Australians have more spending money than ever,with net disposable incomes rising by 5.1 per cent over the past year.

That seasonally adjusted figure, comes fromthe September quarter national accounts, which the Australian Bureau of Statistics released today.

It is just one of many in the national accounts which will worry the Reserve Bank, which only just held off raising rates, yet again, earlier in the day.

The bureau said real net disposable income rose by no less than 1 per cent in the September quarter alone.

But isn’t that a good thing? Well, yes, mostly.

However big surges in income can produce problems, particularly when there is little spare capacity in the economy, a situation the Reserve Bank, itself, says applies now.

The bureau also reported that the Australian economy grew by a quite substantial 1 per cent in the September quarter and by a truly impressive 4.3 per cent in the 12 months to the end of September.

Most economists are now worried that the prospect of the $31 billion in tax cuts, that Labor promised before the election, will encourage even more enthusiastic spending over the coming year.

And they too fear that this could overheat the Australian economy. They are urging the government to find spending cuts, in its own program, to offset that.

The new Finanance Minister, Lindsay Tanner, has promised to do that. His boss, Kevin Rudd, has already promised to take “a meat axe” to wasteful spending in the public sector.

The bureau’s figures also confirm that this is now close to an urgent necessity.

They show , for example, that final consumption spending rose by 1.2 per cent in the September quarter and 3.7 per cent over the year.

It is capital spending associated with the mining boom though, that is really driving the Australian economy. Although it eased by 0.3 per cent in the September quarter it rose by no less than 10.6 per cent over the year.

see www.abs.gov.au for more