OUTLOOK, JULY 2017 Peter Harris Productivity Commission - PowerPoint PPT Presentation

OUTLOOK, JULY 2017 Peter Harris Productivity Commission Productivity Commission 1

2 Topic title Productivity Commission 2

Contributions to income growth Gross national income per capita 4.0 3.0 PPT contribution, annual average 2.0 1.0 0.0 -1.0 Labour productivity Labour utilisation -2.0 Terms of trade Foreign income flows GNI per person -3.0 1960s 1970s 1980s 1990s 2000s to 2012 2012-16 Data source: ABS 2016, Australian System of National Accounts, 2015 – 16, Cat. no. 5204.0, December, and Productivity Commission estimates. Productivity Commission 3

Mining and non-mining investment activity Investment to GDP Notes: Investment to GDP refers to real gross fixed capital formation to real gross domestic product. Data source: ABS 2016, Australian System of National Accounts, 2015 – 16, Cat. no. 5204.0, December, and Productivity Commission estimates. Productivity Commission 4

Non-mining investment growth Non-mining investment volumes (LHS) and growth (RHS) Note: Investment is real gross fixed capital formation, and growth is a simple five-year period end moving average. Data source: ABS 2016, Australian System of National Accounts, 2015 – 16, Cat. no. 5204.0, December, and Productivity Commission estimates. Productivity Commission 5

Where to start…. A right to return, in education • A serious spring clean of urban planning • Address disease prevention as directly as we • address workplace accidents Change the early retirement paradigm • Data, the new resource discovery • Stop creating new barriers to trade and labour • mobility Productivity Commission 6

Australia’s OECD economic ranking Real GDP per capita in 1990 US$ (converted at Geary Khamis PPPs), OECD countries 1 Australia ranked Australia ranked 3 5th in 1950 5th in 2014 5 7 Ranking 9 11 13 Australia ranked 15 15th in 1983 17 1950 1954 1958 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010 2014 Source: The Conference Board Total Economy Database™, May 2015, http://www.conference-board.org/data/economydatabase/; ABS (Australian System of National Accounts, 2014-15, Cat. no. 5204.0, October 2015). Productivity Commission 7

A more open economy Trade intensity (1970-2015) a 2010 Maximum PMV tariff set at 5 50 per cent 1987 Commenced phasing out of 45 TCF quotas 1993 1973 per cent TCF quotas 25 per cent 40 end across the board tariff 35 2015 Maximum TCF tariff 30 set at 5 per cent 25 20 1970-71 1974-75 1978-79 1982-83 1986-87 1990-91 1994-95 1998-99 2002-03 2006-07 2010-11 2014-15 a Refers to nominal exports plus imports divided by nominal GDP. Source: ABS Cat. nos 5302.0, 5206.0 Productivity Commission 8

NOTE: The shaded bars indicate periods of global recession defined as 55 per cent of world gross domestic product in recession. SOURCE: World Development Indicators, World Bank; recession data are from Economic Cycle Research Institute (ECRI). Productivity Commission 9

Household income has improved significantly Labour productivity and real household income a 170 Compound annual growth rates (1986 to 2015): 160 150 RULC -0.5% pa LP +1.6% pa 140 HH Income +1.7% pa 130 120 110 100 90 80 1986 1990 1994 1998 2002 2006 2010 2014 Real unit labour costs Labour productivity Average household income a Labour productivity is calculated as real gross domestic product per hour worked. Real household income is expressed as real gross national income per capita, per household based on Census data on average household size. Data source: ABS Cat. No. 5204, Table 1, 6 & 72, ABS Cat. No. 6202.0, Table 6. Productivity Commission 10

Mismatch between life expectancy and retirement policy People are living longer, but not increasing the time spent in the workforce Life expectancy after 15 (years) 100 Average years in labour force Average years outside labour force 77.9 80 75.6 72.2 67.7 62.4 56.4 32.6 60 30.7 27.7 23.9 20.0 13.2 40 45.4 44.4 44.9 43.2 43.8 42.6 20 0 Oldest Gen Silent Gen Baby Gen X&Y iGeneration GenWhats (1901-1925) 1926-1945 Boomers 1966-1985 1986-2005 2006-2060 1946-1965 Rounding errors means numbers may not exactly sum Productivity Commission 11