How Strong is Australia's Productivity Performance?

Conference presentation

The paper, How Strong is Australia’s Productivity Performance?, was presented by Dean Parham (Productivity Commission), at the Productivity Perspectives 2006 conference.

Abstract

Australia's productivity growth has slowed markedly since record highs were achieved in the 1990s. This paper examines the change in underlying productivity trends since the mid-1990s, as well as the decline in productivity over 2004-05. The evidence of a productivity slowdown contrasts with trends in underlying factors, which have tended to show on-going strength. The contrast can be reconciled by taking into account some one-off short-term factors and to some degree by taking an industry view. The productivity performance of Electricity, gas & water and of Communication services have been significant contributors to the decline. The productivity drop in the last year is associated with the odd combination of slower growth in output and faster growth in labour. There is an industry dimension to this as well. Overall, there is evidence that Australia's 'true' underlying productivity growth is stronger than a first glance at the numbers indicates.