There’s an endless national seminar about the need to lift productivity but not a lot of determined action from leaders to do things differently.
It’s an Australian malaise, but we still keep finding ways of pumping up the economy, either through selling our minerals and resources to China and others, educating their offspring, or importing people.
The blame for stagnation in living standards these past two decades can largely be pinned on the political class, in Canberra and in the states.
They’ve shirked the challenge of building a community consensus to accept some disruption to the status quo and get more return for our capital and labour, to work smarter not harder and to adopt the innovations at the global frontier of progress.
The Productivity Commission’s latest diagnosis makes it abundantly clear: there’s a material cost for this inertia on improving regulation, allocating scarce resources to their best use and letting productivity growth hit the skids.
If we had grown the pie by maintaining our golden era productivity performance of 2.2 per cent growth a year, the average Australian would be earning $25,000 more a year.
Instead, we’ve been in a funk, more concerned about redistribution, which happens when wages growth doesn’t keep pace with productivity.
If pay runs ahead of productivity, employment suffers.
We’ve heard some extravagant claims about the struggle for returns between capital and labour but the commission’s forensic analysis shows that the picture has been skewed by mining and agriculture, which are exposed to wild swings in commodity prices.
This is a blessing and curse for a rich country with a frontier economy. Take them out of the equation – the two sectors employ 5 per cent of workers but produce 18 per cent of output – and labour productivity and real wages for 95 per cent of workers are only slightly out of whack.
The bottom line is you can expend a lot of effort fighting over the spoils but you can get a far bigger return for the whole community’s benefit by reaching for the stars, which our miners and farmers have done with aplomb.
The Albanese government has vowed to take us to a higher realm of growth but appears destined to fall into old ways with new sales pitches. For every step forward on female participation or perhaps competition policy, there’s a slide on workplace laws or backing ventures that should be using private funds (although clean energy will definitely require an almighty public heave-ho).
Just think what you could do with an extra 25 grand during this cost-of-living crunch.
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