time, but like the uk, it is the average that matters. one consequence of lower inflation in australia is the convergence of our bond yields to international norms, or at least the us norm ( graph 4 ). some of you may have been able to remember that as recently as a decade ago, australian government bonds were 400 basis points higher than us government bonds. we think of that as the bad old days, but if you were an international funds manager, you may look back on it as the good old days. another factor that has contributed to the improved acceptance of australian government paper is the recognition that our fiscal policy is very responsible by international standards. the budget has been in surplus for some time now. this, together with the proceeds of the privatisations i referred to earlier, has meant that the outstanding stock of government debt has fallen in absolute terms, and as a percentage of gdp is now the lowest among developed countries ( table 5 ). table 5 : public debt per cent of gdp ; 1999 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - italy 117. 7 belgium 114. 1 japan 105. 4 canada 86. 9 spain 70. 4 sweden 68. 3 france 65. 2 netherlands 62. 9 germany 62. 6 united states 59. 3 denmark 55. 4 united kingdom 54. 0 finland 44. 9 new zealand 34. 8 norway 34. 3 australia 31. 3 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - source : oecd economic outlook, december 1999 i am not sure how fully aware international investors are of these excellent figures on growth, inflation, productivity, public debt, etc., so i have taken the liberty today of indulging in a bit of trumpet blowing. one economic fact, however, that markets are aware of is that australia always runs a substantial current account deficit and, therefore, is a net importer of capital. i have nothing very new to say on this subject other than to point out that it is the result of private agents ’ decisions rather than government ’ s demands on capital markets, and that its magnitude has not changed very much in the last 20 years. it has varied cyclically, of course, but around a basically flat trend. at its cyclical

recent years, growth in the number of dwellings in australia has exceeded growth in population ( graph 10 ). this was especially so during the pandemic, when population growth declined to its slowest pace since the first world war. despite this, there was only a modest increase in the rental vacancy rate. this is primarily because the demand for residential floorspace increased as people worked from home and the average number of people living in each household fell ( graph 11 ). graph 10 population and dwelling stock * year - ended growth % % dwelling stock 2. 0 2. 0 1. 5 1. 5 1. 0 1. 0 population 0. 5 0. 5 0. 0 * dashed lines represent forecasts. sources : abs ; rba 0. 0 graph 11 average household size * capital cities no no 2. 60 2. 60 2. 55 2. 55 2. 50 2. 50 * average number of persons usually resident in an occupied private dwelling ; estimated using labour force survey microdata ; seasonally adjusted ; smoothed line is a 13 - period henderson trend. sources : abs ; rba we are now in a different phase following the opening up of australia ’ s international borders. population growth has picked up sharply and it now seems likely that the annual rate of population growth will soon be around 2 per cent, which would be close to the peak reached during the resources boom. in contrast, the expansion in the supply side of the housing market is expected to be fairly modest. it takes a long time for housing supply to respond fully to shifts in population growth – in the previous episode of strong population growth, it took around five years. one possible adjustment over the near term is that the average number of people living in each dwelling might increase, reversing the pandemic - period fall. this would reduce overall demand for new dwellings. but even if this were to happen, it is likely that the balance between demand and supply in the housing market will result in rents inflation being quite high for a while. this will be one factor adding to inflation over the period ahead. another area where supply - side factors are having an important bearing on inflation is in the energy sector. the price of electricity, as measured in the cpi, increased by 12 per cent last year and we are expecting a further increase of around 15 per cent this year. this surge in prices is not because the demand for electricity in australia has been unusually strong. total electricity consumption has been little changed over the past