Philip Lowe has challenged the Albanese government to reduce its reliance on the Reserve Bank to manage the economy by handing over some of its taxing and spending powers to an independent body.

In his final speech as Reserve Bank governor, Dr Lowe warned there was a “material risk” that Australia’s living standards would stagnate without urgent action by governments to address the “political problem” of low productivity, which had fallen to its lowest level in seven years.