The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of Wayne Swan

Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

1 February 2010

NO.007

Government's Productivity Agenda to Tackle Future Challenges

The Intergenerational Report launched today, Australia to 2050: Future Challenges,shows that improving our productivity is the key to higher living standards in the face of an ageing population.

It underscores the importance of the Government's nation-building agenda – investing in education, skills and infrastructure to underpin higher productivity in the future.

By working towards an Australian workforce that is among the best educated and skilled in the world, and has the tools it needs for the 21st century, we can raise economic growth, improve living standards and help meet the budget challenges of the ageing of our population.

Unfortunately, Australia's productivity performance has slowed over the past decade. Average annual labour productivity growth has fallen from 2.1 per cent in the 1990s, to around 1.4 per cent in the 2000s. We need to do better than this.

If productivity growth were to average 2 per cent per year over the next 40 years, instead of 1.6 per cent, its average over the past 30 years, then:

  • Real GDP growth would average over 3 per cent a year over the next 40 years (compared with 2.7 per cent), and the economy would be $570 billion bigger by 2049-50 in today's dollars.
  • Average living standards (measured by real GDP per person) would be around 15 per cent (or around $16,000 in today's dollars) higher in 2049-50.

The Government has a broad agenda to increase Australia's productivity, including:

  • Investment in critical nation-building infrastructure – in roads, rail and ports, clean energy, water, and health and education infrastructure including computers and Trades Training Centres in schools.
  • Investment in skills and human capital including measures to enhance teacher quality, the early childhood quality education agenda, and investment to achieve ambitious targets for higher educational attainment rates.
  • Supporting innovation in critical areas, including innovation by business, collaboration between private and public sector researchers and investing in the research capacities of our universities and public research agencies.
  • Economic reform, including reducing business costs from regulation and tax reform as part of the response to Australia's Future Tax System Review.

As Australia to 2050: Future Challenges clearly shows, what we do in the next four years can strengthen the foundations of our economy for the next 40 years. That's why the Rudd Government is making the vital investments needed now to lift productivity and living standards into the future.

CANBERRA
1 February 2010