Here is the news:
Australian economy is
now less productive than it was 10 years ago.
Let me spell that out:
for a given quantity of labour and capital, Australia is now producing less than it was a decade ago.
And not just a trifle
less; 5.18 percent less, to precisely report (the inevitably approximate)
estimate of the Australian Bureau of Statistics. (5260.0.55.002 Estimates of Industry Multifactor
Productivity, Table 2, 6 December 2013).
How has this remarkable feat been
achieved? How - in the face of a decade
of technical progress - has Australia managed to produce 5 percent less per unit of input than
it was in 2002/3?
Several candidate
explanations will not serve as answers. There has been no continuous succession
of destructive ‘acts of God’ (droughts, flood) over the past decade, which
would blunt the impact of impact of improving technology. Similarly, there has
been no unremitting upward trend in the price Australia’s pays for the raw
materials it imports, which would have the same effect. (GDP, remember, is the
amount of income derived from the
application of factors of production, and less income will be drawn for any given application of factors if
imported raw materials cost more). Finally, ten years is long enough,
presumably, for factor markets to be in equilibrium on average, and pay each
factor what it adds to production: an implicit assumption of the ABS measure of
‘multi-factor productivity’.
Finally, the dismal
productivity performance occurred over both Liberal and Labor governments;
though the performance under the Rudd-Gillard epoch is worse than
the Howard’s last five years. Consider the percent change in ‘multi-factor
productivity’ year by year:
2002/3 -0.2
2003/4 1.1
2004/5 -1.0
2005/6 -0.6
2006/7 -0.7
2007/8 -0.8
2008/9 -1.7
2009/10 0.1
2010/11 -1.3
2011/12 0.5
20012/13 -0.8
Here is my shot at this unwelcome marvel: the
resources boom is to blame. It has given Australia gratuitous windfall income,
and the entirety of society has taken this income out in the form of leisure on
the job.
Whatever the cause,
the ABS data is grist for a picture of creeping somnolence consuming Australia.
No comments:
Post a Comment