Australia has a productivity problem and workers are on track to work longer for less pay if nothing changes, the treasurer says.
Previewing the five-yearly productivity inquiry ahead of its formal release, Treasurer Jim Chalmers will say productivity growth has reached its slowest point in 60 years, averaging just 1.1 per cent a year.
“Australia has a productivity problem,” Dr Chalmers will tell a Committee for Economic Development of Australia event in Brisbane on Thursday.
The Productivity Commission’s 1000-page inquiry, to be released in full on Friday, will paint a troubling picture of Australia’s productivity performance, which is linked to future prosperity and living standards.
If productivity growth had stayed at its 60-year average, national incomes per person would have been around $4600 higher in 2020.
And, if Australia fails to kickstart productivity growth and stays on its present course, future incomes are expected to become 40 per cent lower and the working week five per cent longer.
Australia is also falling behind other nations.
While many advanced economies have experienced sluggish productivity growth over the past few decades, Australia has slipped 10 places in the OECD’s productivity rankings between 1970 and 2020.
Australia’s productivity is now 22 per cent lower than in the US.
The report will outline five key trends: the growing services sector, the costs of climate change, the need for a more skilled and adaptable workforce, the growing role of data and digital technology, and how economic dynamism is impacted by geopolitical tensions.
“All are complex and none will respond to quick-fix, easy win, whack-a-mole policy making,” Dr Chalmers will say.
The treasurer also says the government is challenged by budget constraints and won’t “pick up and run with every recommendation”, noting that some of the suggestions do not align with the government’s priorities or values.
“We don’t believe productivity gains come from scorched earth industrial relations, for example, or from abolishing clean energy programs.”
Originally due later in the year, Dr Chalmers has opted to bring the comprehensive report forward so that it’s released ahead of the May budget.
“We all want better living standards, we all recognise the central role of productivity growth in that effort,” he will say.
“That’s why so much of our government’s time and effort has been spent building a serious reform agenda here – one that can pair better productivity with a full employment economy that offers more opportunities, to more people, in more parts of the country.”
– AAP
