Annual report 2002-03

Policy reforms were central to Australia becoming a world productivity growth leader in the 1990s, says the Productivity Commission in its annual report for 2002-03, released today.

‘It’s now a decade since the first tentative signs of Australia switching from laggard to leader in productivity growth. Since then, our economy has become one of the best performers in the OECD, giving a boost to average incomes and delivering more jobs’ said Gary Banks, Commission Chairman.

‘There’s now general agreement that microeconomic policy reforms played a central role in this economic transformation,’ said Mr Banks. ‘By increasing our openness to foreign trade and investment and enhancing domestic competition, these reforms were both drivers and enablers of Australia’s recent productivity surge.’

While Australia’s productivity growth reached record highs in the 1990s, the Commission notes that, compared to productivity levels in some other OECD countries, Australia has far from exhausted its productive potential.

Moreover, the Commission identifies some looming challenges in enhancing Australian living standards. These include not only ongoing external competitive pressures, but also the rise of discriminatory trade agreements. On the domestic front, environmental sustainability and an ageing population add further to the productivity imperative.

‘If Australia is to surmount these challenges we need to continue to find ways of raising our productivity performance. This includes getting the best out of our social as well as our economic infrastructure and ensuring that regulation delivers net benefits and does not stifle innovative responses.’