Statement 4 (continued)
Australians have enjoyed rapid rates of income growth over the past two decades, which have contributed to high living standards relative to the rest of the world. With the terms of trade and population ageing now detracting from income growth, productivity growth is likely to be the predominant driver of income growth over the next decade. It is reasonable to expect some improvement in Australia's productivity performance from a cyclical turnaround in labour and capital utilisation, particularly in the resources sector. However, longer‑run factors, including a gradual shift toward lower‑productivity industries, make prospects for productivity growth in Australia more challenging than usual.
Without further effort, the increases in living standards to which we are accustomed are unlikely to continue into the future. It is imperative that we address inefficiencies in the economy and get economic settings right.
The Government has started the process of reform by laying out a plan for fiscal repair, making well‑targeted investments in economic infrastructure, and implementing policy changes that will support business effort and creativity and workforce participation. The Government will pursue these, and further reforms, over the medium term.
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