Fraser Institute analysis finds that the last decade has seen the Canadian advantage eroded in terms of GDP per person
For around 50 years, Canadians enjoyed a higher standard of living than their Australian counterparts – but that has changed.
According to a newly-published analysis of data showing inflation-adjusted GDP per person, the Canadian living standard advantage endured from around the early 1950s until 2008.
In the years from 1973-1995, the average Canadian enjoyed a $2,668 higher GDP per person than Australians, peaking at $3,640 in 1988.
But the Fraser Institute study found that from 2009-2019, the Aussies’ standard of living surpassed that of Canadians by $1,718 on average. All figures use inflation-adjusted US dollars for comparison.
“Australia is an important comparator country for Canada given the economic, historical, cultural and social similarities,” said Stephen Kirchner, director of the International Economy Program at the University of Sydney and author of Understanding the Prosperity Gap between Australia and Canada.
Why the flip?
The flip from the Canadian to Australian advantage is attributed to the latter’s greater success in boosting productivity and higher levels of investment (26% GDP in Australia vs. 22% in Canada).
“Small differences in investment, particularly when driven by competitive pressure in open markets, can result in large differences in economic performance including higher living standards and income,” Kirchner said. “Due to Canada’s relatively low levels of investment, Canadians are poorer than they’d otherwise be—a fact that should concern policymakers in Ottawa and across the country.”
