• Australian workers would be $11,500 better off on average if pre-2012 economic growth continued through the last decade, the Productivity Commission states.
• The last decade exhibited the slowest growth rates for GDP and gross national income per person in 60 years, according to an new report.
• The wage price index did tick up by 1.5% over the past year, but that sluggish improvement “warrants further reflection.”
• Visit Business Insider Australia’s homepage for more stories.

A drop-off in Australia’s economic growth over the last decade means workers are $11,500 worse off each year than if pre-2012 growth rates carried on, according to the Productivity Commission (PC).

In a new report, released Thursday, the PC states the growth rates of both gross domestic product per person, and gross national income per person, were at their lowest level in 60 years through the 2010s.

Strikingly, this holds true even if you discount the 2019-2020 financial year, which saw the Australian economy contract 0.3% in response to the COVID-19 pandemic.

If the average pre-2012 growth rate had instead continued through the decade, the average Australian worker could expect to earn in the vicinity of $85,000 to $90,000 a year, instead of the circa $75,000 figure pegged by the PC.

After the financial crises of the 1970s, Australia’s economic growth rate built to a crescendo in the 2010s, when the mining boom brought an influx of investment and economic activity.

This concentrated period allowed the economy to expand even while growth in comparable nations started to tail off, the PC states.

“Indeed, Australia’s slowdown in productivity is actually less pronounced than that experienced in most other advanced economies, and for a time its effects on living standards were masked by the mining investment boom,” the report states.

“Nonetheless, the effect has been to contribute to a slump in growth in living standards.”

Tellingly, the PC does not point the finger at specific local policy measures or oversights which may have contributed to the slowdown, instead musing on the farfetched idea that something may be amiss on a global scale.

“Whatever the ultimate causes, it is unlikely that domestic policy factors play a strong role given how widespread the slowdown is, unless there are a common policy flaws across the developed world,” the report says.

But regardless of what factors led to sluggish wage growth and overall productivity, the PC says future policy interventions will have an outsized impact on Australian living standards.

“Considering that Australia’s poor economic performance in the 1970s was a key justification for the economic reforms of the 1980s and 1990s, the fact that the last decade of growth was even worse warrants further reflection,” the PC says.

Wages did actually grow 1.5% over the year the March quarter, the ABS states.

But with a new mining boom highly unlikely to power the nation to a new golden age, the Federal Government signaled it will continue with fiscal interventions through the 2021-2022 budget, with an eye to increase employment, drive further wage growth, and spark manageable inflation.

The Reserve Bank of Australia has indicated interest rates will likely remain at rock-bottom rates until 2024, even if ANZ predicts the strength of Australia’s economic recovery could see that interest rate bump occur by 2023.

For now, Australia’s political and financial leaders appear to be pulling the levers in an attempt to stop even grimmer reports from the PC.

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