Per capita national income is running at levels we wouldn’t dare dream about, not even when the productivity surge ignited by the Hawke-Keating reforms of the 80s and 90s was at its peak.

National output and income have grown dramatically with the emergence of China. Per capita real disposable national income is now almost 40 per cent higher than it was at the beginning of the 2000s.

The challenge, of course, is to build on that. China’s growth is slowing as it reduces its dependence on exports and investment and increases the roles of its own consumers and the services sector.

Accelerate and balance

Fortunately, a major speech last month by the Treasurer, Josh Frydenberg, suggests Australia’s politicians may be starting to take seriously the need to re-accelerate productivity-enhancing reform in this country.

In the meantime, the Australian economy must rebalance its growth from its heavy dependence on mining investment and debt-driven housing construction to a broader-based and more sustainable expansion of exports, non-mining business investment and consumer demand.

The big swings in the economic data and the accompanying headlines are part of this bumpy transition.

The mining investment boom was the biggest in our history, it contributed more than half the economy’s growth in 2012 and 2013. But all investment booms must come to an end. When you build enough new capacity to meet the increase in demand, the investment spending must wind down. If it doesn’t, the boom turns into a bust.