Conclusion
This statement has illustrated the remarkable performance of the Australian economy and, in particular, the labour market. Across a broad range of indicators, Australia's economic credentials, including its labour force utilisation, have been impressive. Unemployment rates are at historic lows, employment growth has been high and Australia's participation rate has increased and is well above the OECD average.
There are a number of factors which are important in explaining the strong performance of the labour market. These affect both the demand and supply of labour and include monetary and fiscal policies to maintain macroeconomic stability as well as ongoing economic reform initiatives in the areas of taxation, welfare, labour markets, education and training and immigration.
However, Australia cannot rest on past success. A number of challenges are on the horizon. In particular, in terms of labour market participation, the Intergenerational Report 2007 highlights the impact the ageing of the population will have on reducing Australia's overall participation rate. In addition, the Productivity Commission has highlighted Australia's relatively low levels of participation for certain key cohorts (particularly, prime aged males and females of child bearing age).
For Australia to maintain its impressive economic performance and rates of economic growth into the future there needs to be a continuous focus on maintaining an economic environment which provides the ways and means of improving labour market utilisation. The Productivity Commission estimates that if Australia were to achieve the best practice participation levels of OECD countries, the number of workers would increase by around 600,000, or 5.7 per cent of the current workforce.
While this statement has shown that improving Australia's labour utilisation rate will be important in maintaining strong economic growth, it is only part of the story. As outlined in the beginning of this statement, the other key source of continuing growth in per capita incomes is productivity. Given the demographic trends outlined in the Intergenerational Report 2007, and the trends outlined in this statement, Australia needs to maintain the current policy thrust to get best labour market outcomes while at the same time continuing with the ongoing task of improving productivity performance. The combination of these factors provides the greatest prospect for continuing growth in living standards in the long term.
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