To help those in high office struggling to understand the economy, Alan Austin has prepared this colourful primer for children.
HEY, KIDS! So many grown-ups on television in Australia still believe productivity has been a bad problem over the last four years. Silly sausages!
The people in the Coalition parties, the crossbenchers, at the Reserve Bank, the Productivity Commission, in the mainstream newsrooms and in big business can’t see that productivity has really taken off – like Buzz and Woody in the Toy Story rocket scene.
They haven’t read the reports from England which show the old formula doesn’t work today; studies by David Stroll, Josh Martin, Diane Coyle and other smart people. Or if they have, they didn’t understand the big words.
They still think gross domestic product (GDP) divided by hours worked means something – which it doesn’t – as proven by Jayati Ghosh in India, Ashley Ward in France, and Joseph Stiglitz, Dan Sichel and Chad Syverson in the USA.
They have not listened to Australia’s experts in this area, who include Gigi Foster, Stephen Koukoulas, John Quiggin and David Crosbie.
A very bright woman at Leading Edge Global, Lauren Ryder, has explained correctly that Australia is ‘measuring an industrial-age economy in a knowledge and care era’ and ‘the ruler used to measure productivity is broken’.
Lauren is right. It is also true that Mr Albanese’s Government has restored the economy, including productivity, maybe to its strongest ever.
So here are nine pictures to show what is happening, illustrated in colour so even One Nation senators can follow.
Jobs are created only when productivity advances
In her speech late last month about interest rates, Reserve Bank Governor Michele Bullock said:
“The bottom line is that productivity is doing nothing. And I know we talk about productivity a lot, but it’s so important if we want the economy to be able to grow and create jobs.”
She is absolutely and totally wrong. Productivity is actually doing great. It is the discredited productivity formula – GDP divided by hours worked – which is doing nothing. That old measure, as explained here, here and here, is a dead parrot. Productivity itself is soaring.
The Governor is right to link jobs with productivity. But somehow she can’t see that nearly 1.2 million jobs created in the last four years point to a very strong economy. See chart.
Australia now has close to the best employment situation in its history and one of the best in the whole world today. The jobless rate has been below 4.7% for a record 58 months. The employment-to-population ratio has set a fresh record five times since the 2022 Election. This has averaged above 64% for the last four years.
Australia’s underemployment – the percentage of the workforce wanting to work more hours than they do now – has tumbled. See chart.
Real wage rises
Danielle Wood, who chairs Australia’s Productivity Commission, claims productivity growth is essential for sustained increases in real wages. She is right.
So when Australia enjoyed eight straight quarters of wages higher than inflation from December 2023 to September 2025, maybe that was a clue that productivity wasn’t a problem. It isn’t.
We will never know how long that streak of real wage increases would have lasted if Donald Trump’s “Liberation Day” tariffs and his invasions of other countries had not caused such global disruption in mid-2025 and ever since. See chart.
Business investment and profitability
The Business Council of Australia’s CEO Bran Black last month bemoaned that Australia “doesn’t have the type of competitive settings in other countries overseas that help drive business investment. Business investment, of course, being the primary basis for productivity growth”.
He was right to say investment cannot thrive without productivity. What the duffer either didn’t know, or didn’t want us to know, was that investment is skyrocketing. He is quite naughty to pretend it isn’t. See chart.
Company profits in Australia are dominated by mining, which is impacted by commodity prices rising and falling. Total profits dipped in two of the last three financial years when iron ore prices dropped, but still remained pretty high. Profits ex-mining have steadily increased over the last four years, confirming productivity is fine. See chart.
Business sectors with the strongest productivity gains, as reflected in record profits, include accommodation and food, information media and telecoms, arts and recreation, transport and construction. See chart.
Coalition’s cost of living crisis over
Living standards of virtually all Australians have risen since 2022, as proven by more than forty datasets, most listed here. These include dining out, purchases of electric cars, overseas flights, enrolments in private schools and luxury spending. See chart.
Other luxury items now being imported at record levels include chocolate, beers, fine wines, Champagne, scuba diving equipment, yachts and recreational aircraft.
Total spending on luxuries is now at a record 22.9% of all retail spending. See chart.
Other indicators of rising living standards include credit card debt per adult down at a 24-year low, and all-time high borrowings to buy existing homes or build new ones. See chart.
None of this would be possible if productivity was flat or declining, as the Coalition MPs and drongos in the right-wing newsrooms keep insisting. They are telling porky pies.
So let’s all say this together, kids: ‘The ruler used to measure productivity is broken.’
Alan Austin is an Independent Australia columnist and freelance journalist. You can follow him on Twitter @alanaustin001 and Bluesky @alanaustin.bsky.social.
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia License
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