14 Jul Why have Australian living standards “fallen” and how do we fix it?
Key Points:
- Falling real wages and a surge in tax and interest payments over the last five years have led to a slump in Australians’ living standards.
- But a broader driver of the malaise in living standards has been a slump in productivity growth from over 2% pa in the 1990s to near zero since 2016.
- Amongst other things this has led to a worse growth/inflation trade-off than was the case prior to the pandemic and higher than otherwise RBA interest rates.
- Key policies to boost productivity growth include: tax reform; reducing the size of the public sector; deregulation; greater incentives to invest; and competition reforms.
