Australia's new Prime Minister and Treasurer have both been keen to trumpet good news about the economy in the wake of recent political turmoil.
There is more to the story than Dr Chalmers's claim suggests. A commonly quoted measure of wages included in the National Accounts — average compensation per employee — increased 1.6 per cent over the year to the June quarter in seasonally adjusted terms (a widely-used adjustment to iron out standard seasonal influences). Using the bureau's trend measure (which applies a rolling average to smooth out statistical volatility), average compensation per employee increased 1.7 per cent over the year. A commonly used measure of profits included in the national accounts — gross operating surplus of private non-financial corporations — grew 9.7 per cent in seasonally adjusted terms (or by 8.8 per cent in trend terms). The National Accounts figures showed gross operating surplus of private non-financial corporations grew more than five times faster than average compensation per employee over the year to the June quarter. However, the claim requires context. First, as experts contacted by Fact Check pointed out, profits tends to be more volatile than wages. This is partly a function of the fact that profit — a measure of what is left from revenue after costs — is critically influenced by fluctuations in input prices, commodity prices, exchange rates and consumer demand, all of which can fluctuate significantly. In the face of such volatility, comparing a single quarter of data has the potential to paint a misleading picture. Second, the measure of profits in the national accounts provides a snapshot of the total pool of profits across the economy. This pool grows over time as the economy and output expand. As a consequence, Dr Chalmers is comparing an economy-wide pool of profits, with a per capita measure of wages. As one expert noted, this is not a "like-for-like" comparison. A "like-for-like" comparison involves examining the total pool of profits against the total pool of wages. According to the bureau, the total pool of wages — referred to as total compensation of employees — grew by a seasonally adjusted 4.8 per cent over the year to the June quarter, partly reflecting rising employment. On this measure, profits grew at roughly twice the rate of wages.
Fact check: Are company profits growing five times faster than Australians' wages?
['None']