Productivity Commission
Peter Harris
Chairman, Productivity Commission
29 May 2014
Productivity Commission 2
Contributions to growth in average incomes – same LP growth as last ‘decade’
Note: 1.3 per cent labour productivity growth and no contribution from foreign income flows assumed to 2022Source: ABS cat. no. 5204.0, unpublished ABS data, Treasury calculations and PC calculations
Same growth as 2000-2012
Productivity Commission 3
Contributions to growth in average incomes – needed for long run GNI growth
Note: No contribution from foreign income flows assumed to 2022. Long-run GNI growth of 2.3 per cent a year.Source: ABS cat. no. 5204.0, unpublished ABS data, Treasury calculations and PC calculations.
Needed to preserve long-run GNI per
capita growth
Productivity Commission 4
Productivity in different sectors1989-90 to 2012-13, index 1989-90=100
Manufacturing
Financial and insurance services
Utilities
Mining
50
100
150
200
1989-90 1993-94 1997-98 2001-02 2005-06 2009-10
Labour productivity
MFP
Capital productivity
50
100
150
200
1989-90 1993-94 1997-98 2001-02 2005-06 2009-10
Labour productivity
MFP
Capital productivity
50
100
150
200
1989-90 1993-94 1997-98 2001-02 2005-06 2009-10
Labour productivity
MFP
Capital productivity
Source: ABS (Estimates of Industry Multifactor Productivity, 2012-13, Dec 2013).
50
100
150
200
250
1989-90 1993-94 1997-98 2001-02 2005-06 2009-10
Labour productivity
MFP
Capital productivity
Productivity Commission 5
Multifactor productivity growthin selected countries and regionsAverage annual growth rates, per cent
Data source: The Conference Board Total Economy Database™, January 2014.
1997-2006 2007-2011 2012 2013
World 1.0 0.6 0.2 -0.1
France 0.6 -0.7 -0.7 -0.5Germany 1.0 0.1 -0.3 -0.5
Ireland 1.4 -1.0 -0.7 0.1Norway 0.0 -2.6 0.1 0.1
Sweden 1.6 -0.7 -0.3 0.2United Kingdom 0.6 -0.9 -2.0 -0.1
Europe 0.6 -0.5 -0.7 -0.5
Canada 0.2 -0.9 -1.0 -1.1United States 0.8 0.1 0.7 0.4
Australia 0.2 -1.2 -1.3 -1.3
New Zealand 0.1 -0.8 2.4 -1.2
China 2.8 3.1 0.6 0.0India 1.6 2.7 -0.4 -1.2
Japan 0.2 0.0 1.1 0.7Singapore 1.5 -0.1 -3.4 0.0
South Korea 2.0 2.7 0.2 0.4
Productivity Commission 6
Productivity Commission 7
Labour productivity and real wages: Australia and G20
Productivity Commission 8
Ageing will reduce economy wide participation rates
59
61
63
65
67
691979-80 to 2012-13
Rates with no ageing
Projected participationrates
2013-14 to 2059-60
Productivity Commission 9
Current expenditures are weighted towards older Australians
0-4
5-9 1 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9
0
20
40
60
80
Health
Age Pension
Other
Aged care
Education
Productivity Commission 10
Mismatch between life expectancy and retirement policy
People are living longer, but not increasing the time spent in the workforce
Oldest Gen (1901-1925)
Silent Gen 1926-1945
Baby Boomers
1946-1965
Gen X&Y 1966-1985
iGeneration 1986-2005
GenWhats 2006-2060
0
20
40
60
80
100
43.2 42.6 43.8 44.4 44.9 45.4
13.2 20.0 23.9 27.7 30.7 32.6
Lif
e e
xp
ec
tan
cy
aft
er
15
(y
ea
rs)
Average years in labour forceAverage years outside labour force
56.4 62.467.7 72.2 75.6 77.9
Rounding errors means numbers may not exactly sum
Productivity Commission 11
Growth of the oldest old is set to soar
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
2051
2052
2053
2054
2055
2056
2057
2058
2059
2060
0
2
4
6
8
An
nu
al p
op
ula
tio
n g
row
th
(%)
85+
All ages
75+
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