A further slowdown in global trade, the cost of the transition to net zero and waning business dynamism are a threat to living standards, the bank says.
, comes as the economy is hit by the largest fall in labour productivity on record, souring the outlook for inflation and incomes.
RBA economists Angelina Bruno, Jessica Dunphy and Fiona Georgiakakis pointed to a fading appetite for sweeping economic reform as one of several reasons for lacklustre rates of productivity growth over the past decade.“Without further economic and regulatory policy reforms, the same growth in productivity experienced in past reform decades is unlikely,” the trio said, citing research from the OECD showing elements of Australia’s regulatory landscape were excessively complex.
Under the policy, states received about $600 million a year over a decade for implementing a host of important policies that limited anti-competitive behaviour and reformed the rules of the game for government-owned businesses.Productivity growth in the decade before the pandemic was about 1.3 percentage points lower than the 1999 to 2004 period. The RBA found the finance, utilities, and manufacturing sectors recorded the biggest fall in productivity growth over this period.
While the pandemic caused an unprecedented surge in the uptake of technology, including cloud computing and software enabling remote work, the RBA researchers said it was unclear whether businesses would face the same pressure to innovate now the health crisis is over.
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