Phil Lowe’s final plea to boost productivity growth after being dumped as RBA governor

Ousted Reserve Bank governor Phil Lowe has made one last request as he represents Australia on the world stage for a final time.

Phil Lowe has made one final plea to Australia’s major economic decision-makers as he finishes his term at the Reserve Bank.

In a world obsessed with inflation, the Reserve Bank (RBA) governor used his time at his final G20 meeting in India to beg for more to be done to boost productivity growth.

Mr Lowe’s plea comes just days after it was announced that he would not be reappointed to his position, but that deputy governor Michele Bullock would take his place in mid-September.

Philip Lowe addressed the G20 for the last time as the governor of the Reserve Bank of Australia. Picture: NCA NewsWire/Tertius Pickard

The end of his term comes after he was heavily criticised for the RBA’s run to increase the cash rate in the last 12 months amid sky-high inflation, especially after Mr Lowe had said interest rates would remain at record lows until at least 2024.

Still acting as governor until September 17, Mr Lowe urged the world’s economic experts to consider the “bigger challenge” of low productivity growth amid the inflation crisis.

“[Low productivity] means lower sustainable growth in real wages, it means a limited increase in output as well,” he said.

“It means a slower expansion in the public services we want for our society and it means an increased tension in the distribution of income.

“So low productivity growth means economic and social problems.”

Mr Lowe went on to say that there was hope for productivity but that in order for improvements to be made “good ideas” need to make their way through the political system.

Treasurer Jim Chalmers also flagged the importance of productivity alongside properly bolstering supply chains and labour markets. Picture: NCA NewsWire / Martin Ollman

“If we don’t do that, then we are condemning our citizens to slower growth in real wages, smaller public services and an increased tension on income distribution,” he said.

Joining Mr Lowe at the G20 meeting of finance ministers and central bank governors was Treasurer Jim Chalmers, who also had productivity issues in his sights.

“We also need to recognise that now is not the time to take our focus away from the defining challenge, which is still inflation, but now is the time to think about what kind of economies we want to build as we emerge from the softness and the weakness in GDP growth over the course of the next 12 months or so,” he said.

“That means we need to increasingly focus our co-ordinated efforts on how we make our economies much more productive, and that goes to some of the issues that we need to talk about in this meeting: the energy transformation, how we adapt and adopt technology, and how we get the human capital piece right.”