For decades, economic growth has been the north star of Australian public policy. More jobs, higher GDP, bigger cities—these have been the headlines politicians and business leaders chase. But in 2025, a growing chorus is asking a radical question: does economic growth always improve our lives? The answer lies in the concept of uneconomic growth—a term that’s challenging conventional wisdom and reshaping debates on prosperity, sustainability, and national priorities.
What Is Uneconomic Growth?
Uneconomic growth occurs when increases in GDP actually diminish overall wellbeing. It’s a paradox: the economy grows, but Australians may end up worse off because the costs—environmental damage, social inequality, declining health—outstrip the benefits. This isn’t just theory. In 2025, evidence from across the globe, including Australia, shows that unchecked growth can erode the foundations of a healthy society.
- Environmental costs: Expanding mining, agriculture, and urban sprawl strain water resources, destroy habitats, and increase carbon emissions.
- Social costs: Housing affordability crises, congested cities, and rising inequality often accompany rapid economic expansion.
- Wellbeing stagnation: The Australian Institute of Health and Welfare reports that despite GDP increases in recent years, measures of life satisfaction and mental health have plateaued or declined.
Economist Herman Daly, a pioneer of the concept, argued that “when the marginal costs of growth exceed the marginal benefits, we have entered the realm of uneconomic growth.” In today’s Australia, this isn’t just academic—it’s visible in crowded hospitals, stressed ecosystems, and the growing gap between rich and poor.
Australia’s 2025 Policy Landscape: Shifting Priorities
In response to these challenges, Australia’s 2025 policy environment is evolving. The government’s new National Wellbeing Framework, launched in late 2024, explicitly recognizes that GDP is only one measure of progress. The framework tracks indicators like environmental health, mental wellbeing, and social connection alongside economic metrics.
Key developments shaping the conversation include:
- Climate targets and natural capital accounting: The updated 2030 emissions roadmap requires all major infrastructure projects to account for ecosystem impacts and long-term community costs.
- Taxation and resource management: The 2025 federal budget introduced incentives for regenerative agriculture and higher levies on high-emission industries, aiming to shift investment toward sustainable sectors.
- Urban planning reforms: Several state governments, including Victoria and New South Wales, are piloting “20-minute neighbourhoods”—urban designs that prioritise local services and green spaces over car-dependent sprawl.
These shifts signal a growing awareness that Australia’s prosperity depends on more than just expanding the economic pie. Policymakers are grappling with the trade-offs of further growth versus genuine improvements in quality of life.
Real-World Examples: When Growth Goes Too Far
To see uneconomic growth in action, look no further than Sydney’s western suburbs. Booming population and housing development have driven up GDP and created jobs, but residents face:
- Extreme heat: Urban heat islands, worsened by loss of green cover, have made summer days hazardous for vulnerable groups.
- Traffic gridlock: Infrastructure hasn’t kept pace, leading to long commutes and lost productivity.
- Declining air and water quality: Increased pollution has public health consequences, with higher rates of asthma and heat-related illnesses.
Meanwhile, Australia’s Murray-Darling Basin, once the breadbasket of the nation, has suffered from overextraction and droughts driven by the push for ever-greater agricultural yields. The resulting ecosystem collapse has cost billions in lost production and disaster relief.
These stories illustrate that, beyond a certain point, growth can create as many problems as it solves. The challenge is recognising when we’ve crossed that threshold—and what to do about it.
Rethinking Prosperity: What’s Next for Australians?
The debate over uneconomic growth is gaining urgency as Australia faces mounting environmental and social pressures. More Australians are questioning whether endless GDP gains should trump community health, environmental stability, and social equity. In 2025, alternative measures of progress—like the Genuine Progress Indicator (GPI) and wellbeing dashboards—are entering the mainstream policy conversation.
For individuals, this means paying attention not just to economic headlines but to the full picture: How are our neighbourhoods, schools, parks, and hospitals faring? For policymakers, it means courage to invest in what truly matters, even if it means slower headline growth.
