Now that the Labor Party leadership farce is over, focus has returned once again to Australia’s thorniest problem – our rapidly declining productivity. Yesterday, Treasurer Wayne Swan described productivity as ‘the key to our economic future and to making Australia a winner in the Asian Century’. He is right. But it’s simply not happening.
Since the 1970s, the Australian economy has transformed from a sluggish bureaucratic backwater into one of the most productive economies in the world. Our standard of living has increased markedly as a result. However a decade ago, the productivity miracle ended.
In the year 2000, the Australian economy was 93% as productive as the US economy; today it is only 84% as productive, a level last seen in the late 1970s. What went wrong?
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