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The supplementary commentaries
The supplementary commentaries that follow include a variety of additional information and indicators necessary for a better understanding of Australia's progress. Again they are arranged according to whether they broadly relate to human, natural, produced and financial, or social capital. Some commentaries (those labelled Looking more closely) provide further information about headline dimensions of progress. Others discuss new dimensions of progress, not felt quite important enough to rank among the 15 headline dimensions.
HUMAN CAPITAL
Commentaries look more closely at Health, Education and training, and Work.
NATURAL CAPITAL
Commentaries look more closely at Biodiversity, Inland waters, and Atmosphere. The commentary on Land use in Australia provides further information about the land beyond that given in the headline dimensions Land: Land clearance and Land: Land degradation. Three new dimensions are also included: Marine ecosystems, Invasive species, and Waste.
PRODUCED AND FINAL CAPITAL
Commentaries look more closely at National wealth, National income and Economic disadvantage and inequality. Several other new dimensions of progress are covered here that are important to understanding the workings of the Australian economy. There are commentaries and indicators that assess progress in dimensions of Consumption, Saving, Inflation, Productivity, Capital formation, Knowledge and innovation, Competitiveness, and Openness. How these dimensions fit together, and relate to the two headline indicators, is discussed in the box below.
SOCIAL CAPITAL
A commentary looks more closely at Crime and another discusses Communication and transport. Two short commentaries discuss the areas of Culture and leisure and Governance, democracy and citizenship, although no data are presented for these two dimensions.
HOW THE ECONOMIC INDICATORS FIT TOGETHER
Two headline indicators, National income and National wealth, encapsulate key aspects of progress.
Part of national income may be used to acquire goods and services for Consumption today. Part may be set aside as Saving for future consumption. According to one view of economic progress, a country's material living standard has improved if its residents are today enjoying a higher level of consumption than yesterday (while leaving intact the wealth that will generate future income), or have accumulated additional wealth through saving (while enjoying the same level of consumption today), or both. Some assets (such as owner-occupied housing) may provide consumption services directly to their owners. Some (such as minerals and timber) may be transformed into goods and services that can be consumed or may otherwise generate income at the time of their extraction or harvest. Some (such as machinery) may be used along with labour to support the production processes. And some (such as Australians' equity in foreign businesses or loans to foreigners) may return flows of dividend or interest income to Australia. Regardless of their particular characteristics, all the assets that constitute national wealth can generate future national income and hence support future consumption. The pace of Inflation affects decisions about consumption, saving and investment - it is generally accepted that high rates of inflation can have a detrimental effect on individual and national economic wellbeing.
A strong influence on national income is the production of goods and services. Production can increase if the factors of production - capital, labour and so on - are built up or are used more effectively. Investment builds up stocks of capital (in national accounting terminology, this is the process of Capital formation). An important contributor to building up the stock of labour is education and training which enhance the skills of the labour force (the creation of 'human capital').
Effective use of the nation's factors of production has two aspects. The first is Productivity - the volume of goods and services that can be produced using, say, a given amount of labour and capital. The second is the degree to which available factors are being used or left idle - encapsulated for labour in the employment and unemployment rates and other labour indicators; and for capital it might be encapsulated in capacity utilisation rates. Knowledge and innovation can also enhance a country's productive potential, e.g. the creation and transmission of knowledge builds up human capital; new machines and other fixed capital may contain innovations; new or improved production processes may lead to novel goods and services or to more efficient production of traditional goods and services.
Australia's economic relations with other nations are also important. Increased Openness of a nation's economy means that a wider range of goods and services are available to its residents. Imported capital goods may embody new technologies or other innovations, enhancing Australia's productive potential. The extent of foreign ownership is also a part of openness. Foreign investment may provide access to expertise and processes not otherwise available to Australia.
Australia's Competitiveness affects our international trade, and hence our national production and income. A fall in competitiveness would imply that our goods and services have difficulty finding buyers in domestic and foreign markets - so the incomes of Australian workers and businesses may fall. One fundamental influence on a country's competitiveness in the long run is the rate of productivity improvement relative to other countries. |
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