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Australia has a productivity problem and workers are on track to work longer for less pay if nothing changes, says treasurer.
In a preview of the five-year productivity survey ahead of its formal release, Treasurer Jim Chalmers will say that productivity growth has reached its slowest point in 60 years, averaging just 1.1 percent a year.
“Australia has a productivity problem,” Dr Chalmers will say at an Australian Economic Development Committee event in Brisbane on Thursday.
The Productivity Commission’s 1,000-page inquiry, due to be published in full on Friday, will paint a worrying picture of Australia’s productivity performance, which is linked to future prosperity and living standards.
If productivity growth had held at its 60-year average, national income per person would have been about $4,600 higher in 2020.
And, if Australia fails to boost productivity growth and stays on its current course, future earnings are expected to be 40 per cent lower and the working week five per cent longer.
Australia is also lagging behind other nations.
While many advanced economies have experienced slow productivity growth in recent decades, Australia has dropped 10 places in the OECD productivity ranking between 1970 and 2020.
Australia’s productivity is now 22 percent lower than that of the United States.
The report will outline five key trends: the growing service sector, the costs of climate change, the need for a more skilled and adaptable workforce, the increasing role of data and digital technology, and how economic dynamism looks. affected by geopolitical tensions.
“All are complex and none will respond to quick, easy-to-win, mole-swipe policy making,” Dr. Chalmers will say.
The treasurer also says that the government is challenged by budget constraints and will not “follow up and execute all the recommendations”, noting that some of the suggestions do not align with the government’s priorities or values.
“We don’t think productivity gains will come from scorched-earth industrial relations, for example, or from abolishing clean energy programs.”
Originally scheduled for later in the year, Dr. Chalmers has opted to submit the full report for release before the May budget.
“We all want better living standards, we all recognize the central role of productivity growth in that effort,” he will say.
“That is why so much of our government’s time and effort has gone into developing a serious reform agenda here, one that can combine improved productivity with a full-employment economy that offers more opportunity, to more people, in more parts of the country”.
–PAA
