You might remember that in late 2010, we were warned repeatedly that Australia was facing a ‘wages breakout’. The Australian, in the typically calm and measured tones of its editorial page, warned that “the economy, unfortunately, is facing an economically irrational assault on a scale we have not witnessed for a quarter of a century.”
When it became obvious that wages growth was ticking along at a more-or-less average pace, the focus shifted to the issue of productivity. Our rate of productivity growth, you see, has slowed since the 1990s. If you ignore the fact that the slowdown started over a decade ago, and that the slowest rate of growth in the past couple of decades happened to occur during the Work Choices period, and that it’s widely thought by economists that a big part of the slowdown is a temporary phenomenon associated with the mining boom… well, if you ignore all those things then you just might be able to pin the blame for the slowdown on the Fair Work Act, the industrial relations legislation that came into effect in July 2009.
That’s certainly the tack that our national newspapers took. When the national accounts for March 2011 showed that productivity had fallen, the Financial Review ran a front page article that lamented the “nation’s worst productivity performance in almost six years.” The Australian said that the figures showed “we need ongoing economic reform”. By March this year, the Financial Review had even taken to running articles with a little badge on them marked “HIGH-COST, LOW-PRODUCTIVITY NATION”.
This week, the ABS released the quarterly national accounts, showing that productivity had grown at a pretty solid pace in the September quarter – in fact, the rate of growth over the past year has been around its highest in a decade. In what must be an oversight, neither newspaper chose to highlight this fact. When I search on the AFR’s website, I can find six articles in yesterday’s paper that mention productivity – not one of them mentions the new figures. Laura Tingle noted the pick-up in productivity growth in her column today, but unless I’ve missed something that remains the only reference. At The Australian, I can find two relevant articles – one a piece from the AAP, one a piece from Dow Jones Newswires. I’m not sure if either ran in the actual newspaper.
So, for the benefit of anyone who might have missed them, here are the latest productivity numbers from the quarterly national accounts. In the year to September, real GDP per hour worked rose by 3.3%, compared to an average over the past ten years of 1.1% annual growth. That’s the fastest since 2002. In the market sector, output per hour was up 2.5% over the year, well above the 10-year average of 1.5%.
If you can look at these graphs and spot the deleterious impact of the post-2009 IR regime on our productivity performance then you have very good eyesight.
Of course, productivity jumps around a fair bit. It’s ‘cyclical’ – the rate of growth goes up and down, quarter to quarter, and those short-term squiggles on the graph don’t necessarily mean much. However, the legitimate reasons for caution in interpreting the quarterly numbers didn’t get in the way of our media outlets jumping up and down when the figures were falling.
The recent pick-up in productivity growth might well have nothing at all to do with the Fair Work Act, one way or the other – but, again, the Australian and the AFR were eager to point the finger at the Act when the figures were moving in the opposite direction.
Both newspapers employ a number of smart, diligent journalists for whom I have great respect. Nevertheless, it appears as if news about the Australian economy will only be prominently featured (or even noted at all) in the papers’ pages if it suits the campaign being waged by the editors. We are all the poorer for it.