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2025-09-16 10:12:23
[Australia's slowing fiscal expansion may ease productivity woes] Australia's productivity decline may not be as severe as it appears, and the "slowdown in the rapid expansion momentum" of the government sector may be the key to improving productivity performance. Economist James McIntyre pointed out in a research report on Tuesday that the main drivers of recent productivity weakness have come from the "significant structural expansion" of the mining industry and non-market or government-dominated economic sectors such as education and health care. Australia's productivity growth level ranks last among developed countries - this is crucial for improving living standards and has become a major concern for policymakers. The Reserve Bank of Australia lowered its medium-term productivity growth forecast from 1% to 0.7% last month, bringing it in line with the 20-year average level of non-farm productivity growth. McIntyre expects that by controlling the growth of spending on social programs such as the National Disability Insurance Scheme, the overall expansion of government services will be slowed. He said this would free up resources for the recovery of private sector activity and comprehensively improve overall economic productivity indicators over the next decade.
