{"id":42,"date":"2026-09-15T03:03:39","date_gmt":"2026-09-15T03:03:39","guid":{"rendered":"https:\/\/lmcmigration.com\/aus\/?p=42"},"modified":"2026-10-06T06:27:30","modified_gmt":"2026-10-06T06:27:30","slug":"australia-has-problems-but-things-could-get-worse-so-much-worse","status":"publish","type":"post","link":"https:\/\/lmcmigration.com\/aus\/2026\/09\/15\/australia-has-problems-but-things-could-get-worse-so-much-worse\/","title":{"rendered":"Australia has problems, but things could get worse. So much worse"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">While Australia has problems (housing, productivity, social cohesion, shrinking middle class, skills shortage), regular readers of this column will know me as an unapologetic optimist regarding the future of Australia.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">But today we are doing something different \u2013 we ask how Australia could become much, much worse.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Welcome to a rare&nbsp;<em>Mad Max<\/em>&nbsp;edition of&nbsp;<em>The Stats Guy<\/em>.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In a country where so many people are disappointed in politics and feel they could or should be better off than they are, I often hear the&nbsp;sentiment&nbsp;that \u201cthings can\u2019t possibly get any worse\u201d.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">That\u2019s&nbsp;a spectacular&nbsp;misjudgement. Things could get so much worse.&nbsp;Let\u2019s&nbsp;examine how.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Australia&nbsp;is&nbsp;one of the richest countries despite running&nbsp;a very simple&nbsp;economy.&nbsp;We\u2019ve&nbsp;been dealt an extraordinarily good hand.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">We&nbsp;rule over&nbsp;a continent-sized nation with a small population. We dig things out of the ground and sell them overseas. We grow things and sell them overseas. We educate foreigners. We invite foreigners to visit our country and spend money here.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">That\u2019s&nbsp;it!&nbsp;That\u2019s&nbsp;our whole economy.&nbsp;&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Australia\u2019s standing in the&nbsp;Atlas of Economic Complexity&nbsp;(out of Harvard)&nbsp;has moved from&nbsp;105th to 74th&nbsp;(out of 145&nbsp;countries)&nbsp;not because we diversified our economy but because the&nbsp;folks at Harvard&nbsp;changed their&nbsp;methodology.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Our ranking peers are&nbsp;poor,&nbsp;resource-extracting&nbsp;nations.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The reason we enjoy&nbsp;the lifestyle of an advanced Western economy&nbsp;is the strength of our institutions. Our national wealth is distributed to more than just a corrupt ruling family.&nbsp;&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">There is nothing wrong with this model. In fact, it has worked brilliantly:&nbsp;Resources alone account for 58 per cent of Australian exports. Add&nbsp;other&nbsp;rural exports and the figure&nbsp;approaches&nbsp;70 per cent. China buys around 29 per cent of all Australian exports.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">While we enjoy&nbsp;our current&nbsp;riches,&nbsp;it\u2019s&nbsp;easy to&nbsp;forget just&nbsp;how simple&nbsp;and vulnerable&nbsp;the model is.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Our complacency is&nbsp;mirrored in the&nbsp;latest Global Innovation Index&nbsp;rankings. Australia ranks a respectable 22nd overall and 16th for innovation inputs, but only 27th for innovation outputs.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Our weakest individual indicators include production and export complexity, where Australia ranks 100th \u2013 and labour productivity growth, where we rank 93rd.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In short, we are excellent at creating universities, educated people, stable institutions and research.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">We&nbsp;aren\u2019t&nbsp;turning our&nbsp;knowledge into&nbsp;things that the rest of the world wants to buy.&nbsp;So, what could&nbsp;possibly go&nbsp;wrong?&nbsp;Quite a lot.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Here is my nightmare list for Australia \u2013 you can surely think of a few more terrible dot points to add to this list. Pressed for time? Just read the&nbsp;<strong>bold<\/strong>&nbsp;bits:&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>China&nbsp;buys&nbsp;fewer Aussie resources.<\/strong>&nbsp;China&nbsp;remains&nbsp;our largest customer&nbsp;and&nbsp;buys 29 per cent of our exports. Even more importantly, China has historically consumed vast quantities of Australian iron ore to feed its extraordinary construction and infrastructure boom. A permanently slower&nbsp;Chinese&nbsp;economy simply needs fewer Australian inputs.&nbsp;<\/li>\n\n\n\n<li><strong>Simandou&nbsp;really works.<\/strong>&nbsp;Australia doesn\u2019t own the world\u2019s iron ore market. The giant Simandou project in Guinea contains one of the world\u2019s largest deposits of high-grade iron ore. This isn\u2019t some theoretical future threat either. The Reserve Bank recently noted that Simandou shipments were increasing significantly faster than expected. At the same time, Chinese steel demand weakened and iron ore prices fell 15 per cent from the RBA\u2019s May Statement. More African iron ore means more competition for Australian iron ore.&nbsp;<\/li>\n\n\n\n<li><strong>The developing world becomes more stable.<\/strong>&nbsp;Here is a wonderfully uncomfortable thought. Political stability in resource-rich African nations would be fantastic for humanity but potentially less fantastic for Australia. Part of our competitive advantage is that we are one of the world\u2019s few politically stable, democratic mining superpowers. Better institutions, infrastructure and governance in Africa and Latin America could unlock enormous competing mineral deposits. Australia\u2019s geopolitical scarcity premium shrinks.&nbsp;<\/li>\n\n\n\n<li><strong>We badly mishandle China.<\/strong>&nbsp;We don\u2019t need a war with China to suffer economically. A sufficiently clumsy Australian government could damage the relationship all by itself. China doesn\u2019t just buy our rocks. It buys Australian agricultural products, sends us tourists and sends students to our universities. In 2025, Australian exports to China were worth $196 billion.&nbsp;<\/li>\n\n\n\n<li><strong>We badly mishandle America.<\/strong>&nbsp;Australia performs a&nbsp;rather remarkable&nbsp;geopolitical balancing act. Economically we are deeply integrated with China while strategically we are deeply integrated with the United States. An incompetent, rash or ideological Australian government could damage either relationship. Alienating Washington could threaten defence cooperation, intelligence sharing, investment, access to technology and our position within Western supply chains.&nbsp;<\/li>\n\n\n\n<li><strong>America and China force us to choose.<\/strong>&nbsp;Worse still, imagine a world where even excellent Australian diplomacy isn\u2019t enough. A serious confrontation between China and the US (maybe around a Taiwan as Kevin Rudd suggested at his recent&nbsp;<a href=\"https:\/\/www.youtube.com\/watch?v=Kbmk7cGyAGY\">National Press Club address<\/a>)&nbsp;could force Australia to choose between its most important strategic relationship and its largest export market. There might simply be no economically painless choice available.&nbsp;<a href=\"https:\/\/www.thenewdaily.com.au\/finance\/superannuation\/2026\/09\/20\/ask-the-expert-taxable-pension\"><\/a><\/li>\n\n\n\n<li><strong>International education loses its magic.<\/strong>&nbsp;We have built one of the world\u2019s great international education businesses. But there is no law saying Chinese and Indian families must continue sending their children here. Asian universities improve. American universities become more accessible. Online education gets much better. Student experiences deteriorate. Visa settings become unpredictable. Suddenly one of our great service exports starts shrinking.&nbsp;<\/li>\n\n\n\n<li><strong>Talented migrants decide Australia&nbsp;isn\u2019t&nbsp;worth it.<\/strong>&nbsp;We tend to discuss migration as though Australia holds all the cards. We decide who gets in. But skilled migration is ultimately a two-sided market. Australia must remain attractive enough that talented young Indians, Chinese, Filipinos, Europeans and others actually want to come here. If housing becomes even less affordable, taxes rise, infrastructure deteriorates and wages stagnate while other countries compete aggressively for talent, the best migrants might simply go elsewhere.&nbsp;<\/li>\n\n\n\n<li><strong>We kill migration before fixing the things migration currently fixes.<\/strong>&nbsp;Australia could dramatically cut migration without first training enough nurses, engineers, doctors, construction&nbsp;workers&nbsp;and aged-care workers. Population growth would slow. Great. But the ageing population&nbsp;doesn\u2019t&nbsp;magically disappear. We would simply have fewer working-age taxpayers supporting more retirees while existing skills shortages worsen.&nbsp;<\/li>\n\n\n\n<li><strong>Climate change damages agriculture.<\/strong>&nbsp;Australian agricultural exports were worth almost $76 billion in 2024-25. Agriculture&nbsp;remains&nbsp;another pillar of our wonderfully simple economic model. More frequent drought, extreme&nbsp;heat&nbsp;and water shortages can reduce output while simultaneously increasing the cost of adaptation.&nbsp;<\/li>\n\n\n\n<li><strong>Parts of Australia become effectively uninsurable.<\/strong>&nbsp;A suburb&nbsp;doesn\u2019t&nbsp;need to disappear beneath the ocean to become economically problematic. It just needs insurance premiums to become unaffordable. Repeat floods, fires,&nbsp;cyclones&nbsp;and coastal damage often enough and insurers start pricing the risk accordingly. Property values suffer. Banks become more cautious. Governments inherit enormous liabilities. Eventually we face the politically explosive question of who pays to protect, insure or&nbsp;relocate&nbsp;communities built in increasingly risky places.&nbsp;<\/li>\n\n\n\n<li><strong>The energy transition happens faster than our replacement industries arrive.<\/strong>&nbsp;Coal and eventually gas demand weaken, but Australia&nbsp;fails to&nbsp;build enough industries around critical minerals, green metals,&nbsp;batteries&nbsp;and advanced manufacturing. We proudly ship lithium, iron&nbsp;ore&nbsp;and other raw materials overseas and buy expensive finished products back. Australia\u2019s green economy ends up looking suspiciously similar to its old economy. Different rocks, same business model.&nbsp;<\/li>\n\n\n\n<li><strong>We miss the AI productivity revolution.<\/strong>&nbsp;America invents the technology. Asia manufactures it. Australia consumes it. Our universities produce brilliant researchers and graduates who leave to commercialise their ideas&nbsp;in Silicon Valley. Australia\u2019s innovation problem&nbsp;isn\u2019t&nbsp;that we lack clever people. The&nbsp;above-mentioned&nbsp;Global Innovation Index ranks us&nbsp;8th for human capital and research. The problem is converting our advantages into commercially valuable outputs.&nbsp;&nbsp;<\/li>\n\n\n\n<li><strong>Productivity growth effectively stops.<\/strong>&nbsp;This might be the least cinematic item on the list and&nbsp;ultimately the&nbsp;most dangerous. Nothing visibly collapses. Australia just stops becoming richer per worker. Governments must fund healthcare, aged care, defence, the&nbsp;NDIS&nbsp;and infrastructure from an economy that&nbsp;isn\u2019t&nbsp;becoming much more productive. Politics increasingly becomes a fight over dividing the existing pie rather than enjoying a growing one.&nbsp;<\/li>\n\n\n\n<li><strong>Housing eats the productive economy.<\/strong>&nbsp;Imagine another two decades in which Australians direct extraordinary amounts of income and capital towards bidding up existing land. Young Australians either take on enormous mortgages or remain renters. Businesses struggle to attract workers to expensive cities. Workers become reluctant to move because housing costs make relocation difficult. Capital that might have funded productive businesses instead disappears into increasingly expensive dirt.&nbsp;<\/li>\n\n\n\n<li><strong>Inheritance replaces work as the route into the middle class.<\/strong>&nbsp;Two Australians can earn&nbsp;exactly the same&nbsp;salary and live completely different economic lives. One receives a million-dollar inheritance. The other receives nothing. As the great intergenerational wealth transfer accelerates, economic position increasingly depends not just on what you earn but on who your parents were.&nbsp;That\u2019s&nbsp;a dangerous foundation for a meritocratic society.&nbsp;<\/li>\n\n\n\n<li><strong>Social cohesion falls below a critical threshold.<\/strong>&nbsp;Low trust&nbsp;isn\u2019t&nbsp;merely unpleasant. It makes governing harder. Citizens stop trusting institutions. Every reform is viewed through a tribal political lens. Compromise&nbsp;is interpreted as&nbsp;weakness&nbsp;and becomes functionally impossible. Difficult long-term reforms become&nbsp;no-starters&nbsp;because voters assume somebody else is secretly benefiting at their expense.&nbsp;<\/li>\n\n\n\n<li><strong>We&nbsp;elect&nbsp;genuinely incompetent populists.<\/strong>&nbsp;This brings us back to \u201cthings can\u2019t get any worse\u201d. They absolutely can. Governments can politicise the public service, weaken independent institutions, introduce economically nonsensical protectionism, run reckless fiscal policies, undermine investment certainty, run destructive foreign policy,&nbsp;and pick unnecessary fights with allies and trading partners. Competent government is an economic asset. Incompetent government is&nbsp;a risk to our simple but usually reliable business model.&nbsp;<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">And finally,&nbsp;a&nbsp;reminder that even as things get worse, things could get worse.&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Several of these things happen at the same time.<\/strong>&nbsp;This is the genuine&nbsp;<em>Mad Max<\/em>&nbsp;scenario. Chinese growth slows. Simandou floods the market with iron ore. Coal prices fall. International student numbers collapse. Climate adaptation costs rise. Productivity remains miserable. The population ages. Social cohesion deteriorates. Amateurish foreign policy worsens our relations with regional trade partners.&nbsp;<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Australia doesn\u2019t suddenly become poor \u2013 at least that\u2019s not how decline usually works. Instead, year after year we become slightly poorer relative to our benchmark nations.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Living standards stagnate. Taxes rise. Services deteriorate. Infrastructure falls behind. Housing remains expensive. Young people become more pessimistic. Politics becomes angrier. Life becomes less fun.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Then each of those developments&nbsp;continue to&nbsp;reinforce the others.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">We mustn\u2019t&nbsp;mistake&nbsp;our&nbsp;good hand for great skill.&nbsp;<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">None of these terrible developments are actually my forecast \u2013 I remain optimistic about Australia.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">We possess almost every ingredient necessary to remain one of the world\u2019s most&nbsp;prosperous&nbsp;nations.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">We have resources, energy, land, food, excellent universities, talented people, strong institutions, proximity to growing Asian markets and the enormous advantage of being a stable liberal democracy.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">But perhaps we have been dealt such an extraordinarily good hand that we occasionally mistake the hand for skill.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Many of the things that make Australia rich aren\u2019t guaranteed.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Political stability isn\u2019t guaranteed. Social trust isn\u2019t guaranteed. Competent government isn\u2019t guaranteed. Access to Chinese markets isn\u2019t guaranteed. American friendship isn\u2019t guaranteed.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">High commodity prices aren\u2019t guaranteed.&nbsp;The willingness of skilled&nbsp;migrants&nbsp;to move here isn\u2019t guaranteed.&nbsp;The willingness of foreign&nbsp;parents&nbsp;to educate their children here isn\u2019t guaranteed.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">These are assets.&nbsp;Like any assets, they can be squandered.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">So next time somebody tells you they are willing to roll the political dice because the current system has failed and \u201cthings can\u2019t possibly get any worse\u201d, remember&nbsp;that things can always get worse.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Since everyone is still&nbsp;queuing at the cinema to watch&nbsp;<em>The Odyssey,<\/em>&nbsp;let me finish this column with a Homer quote:&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>While Australia has problems (housing, productivity, social cohesion, shrinking middle class, skills shortage), regular readers of this column will know me as an unapologetic optimist regarding the future of Australia. But today we are doing something different \u2013 we ask how Australia could become much, much worse. Welcome to a rare&nbsp;Mad Max&nbsp;edition of&nbsp;The Stats Guy.&nbsp; [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":68,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_ib_featured_on_home":true,"_ib_panel_note":"Notes on a future to be avoided","_ib_guest_author":"Simon Kuestenmacher","_ib_source_url":"https:\/\/www.thenewdaily.com.au\/opinion\/2026\/09\/15\/the-stats-guy-australia-mad-max","footnotes":""},"categories":[1],"tags":[],"class_list":["post-42","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/lmcmigration.com\/aus\/wp-json\/wp\/v2\/posts\/42","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lmcmigration.com\/aus\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/lmcmigration.com\/aus\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/lmcmigration.com\/aus\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/lmcmigration.com\/aus\/wp-json\/wp\/v2\/comments?post=42"}],"version-history":[{"count":3,"href":"https:\/\/lmcmigration.com\/aus\/wp-json\/wp\/v2\/posts\/42\/revisions"}],"predecessor-version":[{"id":178,"href":"https:\/\/lmcmigration.com\/aus\/wp-json\/wp\/v2\/posts\/42\/revisions\/178"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/lmcmigration.com\/aus\/wp-json\/wp\/v2\/media\/68"}],"wp:attachment":[{"href":"https:\/\/lmcmigration.com\/aus\/wp-json\/wp\/v2\/media?parent=42"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/lmcmigration.com\/aus\/wp-json\/wp\/v2\/categories?post=42"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/lmcmigration.com\/aus\/wp-json\/wp\/v2\/tags?post=42"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}