PM thinks he’s doing wonders on the productivity front. He is not.
But how the hell was it done? Mainly through the advancement of technology. Continuously since the industrial revolution, we have been inventing machines that allow us to produce goods using fewer and fewer workers.
This dramatically reduced the proportion of the workforce needed to work in agriculture, mining and manufacturing, but made it possible to pay many more people to deliver services ranging from doctors and teachers to people working in elderly care, disabled care and child care. Over the decades, total unemployment has hardly been altered by labor-saving technologies.
Labor productivity has also been improved through better education and training of workers, and improvements in the way businesses are run.
Now, as we saw last week, Australia’s rate of productivity improvement has slowed markedly since the global financial crisis. And, to be fair, we have to remember that the same has happened in other wealthy economies.
But that is no reason the government should not do what it can to turn things around. And he did not fail to talk about everything the Coalition is doing to improve our productivity. What is missing are signs that all of these stated efforts are doing a lot of good.
It’s clear Scott Morrison hates being held accountable, but Denniss and Saunders have put together a remarkable list of the claims he made, especially when he was treasurer, to work wonders on the productivity front.
In 2016, he said the creation of the Australian Building and Construction Commission was “a major reform. . . which will boost productivity, which will support wage growth, which will support the increase in profits of small businesses so that they can grow and develop ”.
That same year, he claimed that the government’s so-called “free trade agreements” with other countries “would increase Australia’s productivity and contribute to higher growth by allowing domestic companies to access cheaper inputs, introducing new technologies and promoting competition and innovation. ”.
This is a claim that the Productivity Commission and many economists would strongly dispute.
Treasurer Morrison also asserted that “the government is implementing a $ 50 billion national infrastructure plan to free up our productive capacity, create jobs and expand business and labor market opportunities.” Parking lots at stations, for example?
Other ministers have made similar statements, including Christian Porter’s claim that his reform of wage setting rules “would make the bargaining system go.” . . more efficient and, above all, capable of achieving these dual objectives of productivity and higher wages ”.
Not to mention the various tax cuts – the corporate tax rate for small businesses; three-step income tax cuts, including the last step, in 2024, which will deliver huge tax cuts for high earners despite adding $ 17 billion a year to an already inflated budget deficit – which are still justified as encouraging more effort, innovation and investment.
The problem is, all of these so-called accomplishments did nothing to encourage the authors of last week’s intergenerational report to increase their alleged rate of improvement in annual productivity over the next 40 years.
In effect, they reduced the rate by a fraction to 1.5 percent per year. They said nothing about the above “reforms” helping to justify even this lower assumption, which is actually much higher than the 0.7% average annual improvement achieved in the five years leading up to the coronation. .
Moreover, the report and Treasurer Josh Frydenberg acknowledge that it will take a lot more reforms to bring the rate of productivity improvement to 1.5% per year. What they don’t do is say what reforms they have in mind. We may be told after next year’s election. Or maybe it will just be the same kind of “reforms” that Morrison assured us they do so good.
In the old days, big business executives and conservative politicians would tell us that our goal should be to increase the size of the pie for everyone (that’s what improving productivity does), not to fight for it. the size of my slice of the pie compared to yours.
Maybe they stopped saying this because, if we looked too carefully at all of the changes that they assure us that they will improve productivity, we would notice that they are aimed at increasing the owner’s share of the pie. business and high income earners.
Ross Gittins is the business writer