Productivity report finds growth at lowest level in 60 years
Productivity growth in Australia has fallen to its lowest level in 60 years, averaging just 1.1 percent a year.
The new figures are part of the Productivity Commission’s report, which confirms, according to treasurer Jim Chalmers, “Australia has a productivity problem”.
In a speech delivered on Thursday, the treasurer was quick to blame his predecessors for low growth, saying Australia had just had a “wasted decade”.
“In the medium and longer term, our success will be determined by whether or not we can raise living standards – and that, in turn, will be determined by whether we can replicate the dismal productivity performance we saw during the wasted decade. to leave behind us. ” he said.
Productivity is a measure of how the goods and services produced by Australia increase over time and can be affected by improvements in technology, workforce skills, management practices and changes in capital.
According to the Productivity Commission, increases in productivity growth are seen as driving long-term improvements in living standards.
This trend has caused Australia to drop ten places in productivity rankings, according to Dr Chalmers, from sixth to sixtieth in the OECD from 1970 to 2020, now 22 percent lower than the United States.
If productivity remains at current levels, the report projects that future incomes will be “40 percent lower and the workweek 5 percent longer.”
Dr. Chalmers will release the full 1,000-page report on Friday.
But he said in a speech to CEDA that the areas Australia needs to address to increase productivity are “complex” and will not respond to “whack-a-mole policymaking”.
One of the biggest problems is the growing service sector and care economy, which has seen no average productivity growth since 2000 and “will grow naturally and productivity will slow as our population ages,” said Dr. Chalmers.
The move to net zero by 2050 was also highlighted in the report, with the transition to require billions in investment.
“This will help us avoid some of the worst impacts of climate change by creating new sources of growth that will improve our productivity performance over time,” said Dr. Chalmers.
The treasurer also hinted at what might come in May’s budget, saying that “restraint” and “cost of living where we can afford it” will be guiding principles for decision-making.
“This won’t be easy or fast, but together we can start to methodically turn it around,” he said.