Dean Parham has done some outstanding work explaining the sources of the improvement in Australia's productivity performance since the early 1990s. His work consistently shows that this was largely the result of policy reforms aimed at exposing the Australian economy to greater domestic and international competition.

It follows from Dean's work that the the deterioration in productivity performance since 2003 may be due to the absence of any significant productivity-enhancing reforms since the late 1990s.

It's also worth wondering whether this deterioration might not be at least in part due to an explosion of productivity-stifling regulation in two areas over this period - security and corporate governance.

As a few moments spent in any airport or any large building accessible to the public will confirm, there are now employed across Australia tens of thousands of people who do absolutely nothing (or at least, nothing which contributes to lifting productivity) except prevent those who are doing something from doing it as quickly or as cheaply as they otherwise would - in the (I would argue) mistaken belief that this will reduce the likelihood of people dying in a terrorist attack.

In much the same way, following the sequence of corporate scandals and collapses in the US, Australia and elsewhere in the early years of the current decade, governments and regulatory agencies have required businesses to employ thousands of additional people to produce reports that hardly anyone will ever read, in the (I would argue) mistaken belief that this will result in better standards of corporate governance and fewer corporate scandals.

I'm not suggesting that the explosion of regulation in these areas is the sole cause of the deterioration in productivity growth since it started (the ABS provided some other plausible explanations in its commentary on the June quarter national accounts). And I accept that it would be very difficult to quantify the impact of such regulations on productivity growth. But I think Dean Parham would be performing a service to the nation if he attempted to do so, and I would encourage him to take up the challenge.

There are also those who say that productivity growth over the last few decades is due to the technology boom that now seems to have stalled. I don't see how government policies over the last 10 years has done anything to prepare us for the lull which we are now in.

I agree with both previous posters, in so far as from my experience as an employee since 1970, I have seen the pace constantly quicken, I had worked trough the era, and from personal experience I know technology has played a huge part in increased productivity, but so has has the employee, who is working harder, and longer, mostly without overtime payment{in fear of losing their job} over the 80's&90's. Sadly I broke down after 21 years of continued employment with a single employer, from these conditions. I now do not have the capacity to work, and support my family. Long, fast days, leading to short weekends spent sleeping to prepare for the onslaught of the coming week, always repeated for 21 years took a toll. Now I am a liability, rather than an asset, this Government is going to thank me for my contribution, by cutting my part-disability pension by $29 per fortnight. I have seen {supposed} Managers, "run a report" to try to find answers they should have known without reports, but instead of applying common sense, it was deemed the answer lay "in the report" I wonder what Saul thinks of the professionalism of Management in this country, as I worked for a {Manager?} in the late 80's who had been promoted from a sales rep's position, who had gained his certificate of Management in the 60's. In my opinion, he was totaly out of touch with the realities of modern business at the time, and was incompetent, which caused staff to work much harder than should have been necessary, to achieve goals. I was a lowly paid purchasing officer, who had to "run reports" which I kept to an absolute minimum, and used common sense to solve the sticky situations. I think much more emphasis must be placed on Managers having up to date qualifications, this in turn would lift productivity, by working smarter, instead of harder, I learnt that the outstang thing about common sense is, it is not common.

I find this sort of talk about productivity a real worry.

Productivity is not defined here. It needs to be, as this article has been put to the general public on this forum and in The Australian. It is not a natter amongst experts.

Dean Parham writes in terms of total productivity, not per-capita productivity, which is a much more meaningful parameter. He doesn’t acknowledge that a lot of growth in productivity is automatically generated by an increasing population, without there being an increase in average per-capita productivity. In fact the average per-capita productivity in Australia has been declining for a long time, hidden beneath a continuously growing (or perhaps at times steady) total productivity. Then there is the ever-widening gap between the rich and poor (or unrich), which means that even an average per-capita measure of productivity is becoming a progressively less meaningful indicator.

Saul Eslake says that a deterioration in productivity performance (which doesn’t necessarily mean a decline in overall productivity - it might mean a lower growth rate, or even a stabilisation of the growth rate, instead of the desired increasing growth rate) might be at least in part due to an explosion of productivity-stifling regulation. No doubt this true, but regulation is there for a very good reason – to protect future productivity where resources are being procured at an unsustainable rate, to protect the environment, and to protect us and our way of life. These regulatory things are good for us, generally speaking. But they show up as negatives in terms of productivity, and a lower productivity is taken as a strong indication that things are worse for us.

Besides, is all this regulatory activity not part of our economic dynamism and hence productivity? It contributes to our GNP, so one would think that it contributes to productivity. Afterall even regulators that are not actually producing anything are being productive inasmuch as they are employed, spend money, created demand for goods and services and (sometimes at least) actually do meaningful productive things in their jobs.

The countries so called productivity growth is a myth, as is supposed economic sustainability. One form of proof for this, our current account deficit that grows unabated. Anyone with half a brain can tell these fools that you can't say you are being productive when you buy more than you produce.

So Dean tell me why the deficit isn't taken into account when determining productivity and if it is then how can you say a massive growing defict is a sign of productivity. I may not be that bright, but if I ran my business with a growing negative balance between what we produce and what we buy, I would be talking to a liquidator. I would really like to know how you can turn such a huge negative into a positive so that I can change my business approach to emulate the brilliant rational of owing more than we earn on the world market

If productivity is going so onky dory then why do we have an ever increasing number of work years needed to buy an average family home. Up 10 fold since the 50's. And in a country that no longer has a machine tool base and no planning for infrastructure (read vision) I fear this is just another post by a bow tie wearing boffin too much in love with numbers that have no relation to the reality of the physical world.