LABOR PRODUCTIVITY – AUSTRALIA

RBA’s grim growth warning

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Original article by Michael Read
The Australian Financial Review – Page: 1 & 4 : 13-Aug-25

The Reserve Bank of Australia has downgraded its forecast for productivity growth in the medium-term from one per cent to just 0.7 per cent. RBA governor Michele Bullock says lower productivity growth is already resulting in slower growth in real wages; she adds that the central bank cannot do anything to lift productivity, and the outlook for this metric will depend on what the federal government does in response to its economic reform summit next week. The RBA has also warned that the domestic economy can now sustain a GDP growth rate of just two per cent a year. Meanwhile, economists expect another official interest rate cut by the end of 2025, after the RBA reduced it by 25 basis points to 3.6 per cent on Tuesday.

CORPORATES
RESERVE BANK OF AUSTRALIA

Non-market job boom a drag on productivity

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Original article by John Kehoe
The Australian Financial Review – Page: 4 : 16-Jul-25

The Department of Employment & Workplace Relations has warned that a rapidly expanding ‘non-market sector’ presents a challenge for the federal government. The department’s briefing for incoming Employment Minister Amanda Rishworth also notes that overall productivity growth has been impacted by the non-market sector’s increasing share of the economy. This sector includes the health care and social assistance, education and training and public administration and safety industries; it includes both public and private service providers that receive government funding. Four out of five jobs created in the last two years have been in this sector, including the National Disability Insurance Scheme.

CORPORATES
AUSTRALIA. DEPT OF EMPLOYMENT AND WORKPLACE RELATIONS

GST warning in roundtable revamp

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Original article by Matthew Cranston, Greg Brown, Sarah Elks
The Australian – Page: 1 & 4 : 25-Jun-25

Prime Minister Anthony Albanese had pitched the federal government’s plans to bring unions, business leaders and community groups together in August as a productivity roundtable. However, Treasurer Jim Chalmers has sought to broaden the scope of the summit by describing it as an "economic reform roundtable". He has also reiterated that the goods and services tax will be on the agenda; Chalmers adds that changes to the GST will only be considered if they are revenue-neutral and in the national interest.

CORPORATES
AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, AUSTRALIA. DEPT OF THE TREASURY

Bosses demand tax reform as a priority

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Original article by Matthew Cranston, Perry Williams
The Australian – Page: 1 & 4 : 12-Jun-25

The Centre for Independent Studies’ chairman Nicholas Moore has welcomed the federal the government’s decision to make productivity a focus of its policy agenda for its second term in office. Business leaders and economists agree that tax reform should be a key priority for the government’s productivity roundtable in August. However, the former Macquarie Group CEO, who is an adviser to Prime Minister Anthony Albanese, says tax reform is difficult and it has been an issue for 25 years; Moore adds that issues such as housing and the red-tape burden are likely to take precedence at the roundtable.

CORPORATES
THE CENTRE FOR INDEPENDENT STUDIES LIMITED, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, MACQUARIE GROUP LIMITED – ASX MQG

$250bn GDP forgone on weaker growth

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Original article by Matthew Cranston
The Australian – Page: 1 & 6 : 30-Apr-25

Australia’s productivity growth has averaged just 0.2 per cent a year over the last decade. The Coalition has committed to a new productivity growth target of 1.5 per cent a year if it wins the election on Saturday. In contrast, Labor’s first budget in 2022 included the assumption that productivity growth would average 1.2 per cent over the long-term. The Coalition contends that annual GDP would be about $250bn higher if productivity had grown at this pace, while annual tax revenue would have been $50bn higher.

CORPORATES
AUSTRALIAN LABOR PARTY, LIBERAL PARTY OF AUSTRALIA

Public sector jobs boom a poor investment

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Original article by Michael Read
The Australian Financial Review – Page: 5 : 10-Sep-24

Treasurer Jim Chalmers has contended that government spending prevented the economy from recording negative growth in the June quarter. Strong jobs growth in the public service over the last year was a key driver of government spending over the quarter. However, analysis of the latest national accounts data shows that productivity in the public service – as well as government-funded sectors such as health and education – fell to 2006 levels during the quarter. IFM Investors’ chief economist Alex Joiner says jobs growth in these ‘non-market sectors’ are fuelling the decline in productivity; he adds that when these sectors are excluded, productivity is quite good.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, IFM INVESTORS PTY LTD

Warning on jobs rate if productivity stalls

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Original article by Ewin Hannan
The Australian – Page: 4 : 15-May-24

The 2024 budget papers indicate that productivity has grown for two consecutive quarters, and that it is expected to continue to pick up if economic conditions improve. However, Treasury has warned that if productivity does not improve as expected, it could lead to a rise in unemployment. Meanwhile, the budget papers have forecast that annual wages growth will decline from 4 per cent to 3.25 per cent over the next two financial years before rising to 3.5 per cent in the subsequent years of the forward estimates, while lower forecast inflation will result in real wages growth of 0.5 per cent each year over the forward estimates.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY

3pc wage rises may be new norm: NAB

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Original article by Michael Read
The Australian Financial Review – Page: 4 : 23-Apr-24

Annual productivity growth averaged 1.2 per cent in the decade prior to the COVID-19 pandemic, but National Australia Bank believes that productivity growth is likely to average 0.5 per in coming years. The mining investment boom was a major driver of pre-pandemic productivity growth, and NAB senior economist Taylor Nugent contends that returning to this level of growth would require a substantial rise in non-mining productivity. NAB warns that lower productivity growth means that workers should expect annual pay increases of no more than three per cent in coming years.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB

States sign up for new competition agenda to lift wages

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Original article by Shane Wright
The Age – Page: Online : 8-Mar-24

NSW Treasurer Daniel Mookhey has hosted a meeting of federal, state and territory governments that has been as acting as a possible starting point for new competition reforms that will in turn lead to higher wages. Many economists believe that the recent decline in global and Australian productivity is partly due to a lack of competitive pressures, which force companies to look at new ways to lift output or better utilise their staff. One issue that the meeting looked at was the growing use of non-compete and no-poach clauses in workplace contracts or agreements, with recently released research from the Australian Bureau of Statistics finding that 47 per cent of businesses imposed at least one form of restraint clause on their workers.

CORPORATES
AUSTRALIAN BUREAU OF STATISTICS

Micro-taxes stifle productivity

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Original article by Patrick Commins
The Australian – Page: 5 : 13-Dec-23

The Productivity Commission has released a research paper which raises concern about the growing use of industry levies by Australia’s federal and state governments. The Commission has found that governments are using these levies to raise $11bn in revenue a year ‘by stealth’. The agricultural sector was initially the focus of industry levies, but the Commission notes that the sector now accounts for just $600m of this revenue. Deputy chairman Alex Robson contends that taking action to rein in the use of industry levies could help to boost the nation’s productivity.

CORPORATES
AUSTRALIA. PRODUCTIVITY COMMISSION