“The productivity discussion is one that we as a nation badly need. Anything we can do to raise the awareness generally is to be welcomed. It seems to me that continuous productivity improvements in the economy at large have taken a back seat over the last 10 -15 years largely because of the resources boom, what that did for our terms of trade, in some ways making things too easy. Driving productivity is not always easy particularly on a long term basis. Now that this once in a lifetime boom has not only ended but reversed the income trend, it’s not too late to get back to basics, in fact it is essential, if we are to maintain our standards of living. Whilst I understand the aspiration to embrace productivity and see that potentially as a long term competitive advantage, I’m not sure that we’re anywhere near first base in the process i.e. closing the gap. The awareness, understanding and consequences of following or not following this path does not seem to me to be widely understood in the community at large.
In the opening remarks, “…the need to improve productivity is now well understood” is asserted. I’m not sure I understand the basis for this assertion. It is maybe well understood by economists and some business leaders, but I’d be surprised if it is understood by the majority of our politicians, trade unions, management and the broad working population. It doesn’t seem to me that there is a consensus to get on with the job of moving up the productivity curve. In fact I fear that “productivity” is seen by many politicians and some sections of the community as a euphemism for job losses, longer hours, more from less – to be avoided, resisted, at all costs. Somehow we have to break this cycle and get the country focused on what needs to be done .
I note that the chapter touches on regulation but hardly mentions government subsidies. These are touchy political subjects. It goes without saying that we need to aggressively drive down the amount of regulation and red tape if we are to encourage business activity. Again some in the political sphere seem to have the opposite view and we tend to swing like a regulatory pendulum depending on the political leaning of the government of the day.
Subsidies is a difficult political issue. Once established they are very hard politically to wind back. Industries (and politicians) get hooked on them. The car industry is a case in point. I would have thought that federal and state subsidies for various industries is fundamentally counterproductive in relation to productivity and economic efficiency. There may be a case for some targeting but we seem to go way beyond this. It is almost industry welfare.
My comments are focussed on the productivity chapter, but I very much look forward to reading and commenting on other chapters in the book which I hope addresses issues like labour productivity in an age of entitlement, but a focus on getting as many people into productive roles in society, raising participation, whether that be e.g. opening up opportunities for more women in the workforce, strategies to get more people off welfare dependence into meaningful jobs, may add to the discussion on national living standards and opportunity. Easy to say economically, but politically……”
Ex CFO, Coles Myer