Is it time for Australia to move beyond GDP? As the nation grapples with climate risks, rising inequality, and the social aftershocks of recent economic shifts, experts and policymakers are turning their attention to a new way to measure progress: the Genuine Progress Indicator (GPI). In 2025, GPI is gaining serious traction as a more nuanced, future-focused alternative to the traditional Gross Domestic Product. Here’s why the conversation is changing—and what it could mean for your community, investments, and wellbeing.

GDP vs. GPI: What’s the Difference?

For decades, GDP has been the gold standard for measuring a country’s economic health. But critics argue GDP is a blunt tool—it counts all economic activity as positive, even if it’s harmful (think: oil spills or increased healthcare costs from pollution). It ignores unpaid work, environmental costs, and social cohesion.

• GDP: Measures total market value of goods and services produced in a country.
• GPI: Adjusts for factors like income distribution, environmental degradation, household labour, volunteer work, and the cost of social problems.

In short, GPI aims to answer: Are we better off?—not just, Are we producing more?

Why GPI Matters for Australia in 2025

The Australian government, following mounting calls from the Productivity Commission and leading economists, is piloting GPI alongside GDP in 2025. This comes after growing evidence that GDP growth hasn’t translated into better living standards for all Australians, especially in the wake of the 2022–2024 inflation crisis and environmental challenges.

• Policy Shift: The Treasury’s 2025 ‘Measuring What Matters’ framework now references GPI in its wellbeing dashboards.
• Environmental Accounting: The inclusion of climate and biodiversity costs in GPI is particularly significant as Australia intensifies its decarbonisation push under the 2025 National Climate Resilience Strategy.
• Real-World Example: Victoria’s 2024-25 state budget piloted GPI reporting, showing a divergence from GDP due to wildfire recovery costs, mental health impacts, and unpaid caregiving.

GPI is also influencing corporate sustainability disclosures, with major super funds referencing GPI-adjusted metrics when assessing long-term community impacts.

The Benefits—and Limitations—of GPI

GPI offers a more holistic view of progress, but it’s not without challenges. Here’s what Australians need to know:

• Pros:
  • Recognises unpaid work—like parenting and volunteering—as valuable economic contributions.
  • Accounts for income inequality, giving a truer sense of broad-based prosperity.
  • Subtracts the costs of resource depletion, pollution, and social breakdown.
  • Encourages policy innovation focused on wellbeing, not just productivity.
• Cons:
  • Data collection is complex and can lag behind real-time events.
  • Subjectivity in valuing non-market activities (like leisure or ecosystem health) can fuel political debate.
  • Not yet universally adopted—GDP remains the benchmark for international comparison.

Despite these hurdles, the 2025 trend is clear: governments, business leaders, and communities want a broader definition of progress—one that reflects the quality, not just quantity, of economic activity.

How GPI Could Affect Your Financial Decisions

As GPI gains prominence, expect to see its influence ripple across everything from superannuation strategies to government budgets and community grants.

• Investment Choices: Super funds and ethical investment vehicles are increasingly referencing GPI-style metrics when evaluating ESG (environmental, social, governance) impacts.
• Policy Advocacy: Local councils and advocacy groups use GPI data to push for infrastructure, health, and education spending that delivers genuine wellbeing gains.
• Personal Finance: Australians may see changes in tax incentives, grants, and public spending as governments prioritise GPI-aligned projects (think: green energy, accessible healthcare, affordable housing).

The bottom line: GPI won’t replace GDP overnight, but it’s reshaping how Australia defines—and invests in—prosperity for the next generation.