This paper by Dean Parham was presented to the 31st Annual Conference of Economists in Adelaide on 1 October. The paper was presented in a session on Microeconomic Reform Revisited.

Microeconomic reforms were introduced from the mid-1980s to stem the slippage in growth in Australia’s productivity and living standards. Productivity growth more than doubled in the 1990s to reach a record high.

A range of possible explanations for the productivity surge are examined in the paper. The three most plausible are microeconomic reforms; education and skills in the workforce; and the rapid uptake and smart use of information and communications technologies.

To a certain extent, these three factors have interacted. The surge in productivity growth has underpinned growth in average incomes that is strong by both historical and international standards.

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Contents

1 Introduction

2 The motivation for policy reform
Why did Australia perform poorly?
The growing imperative for reform

3 The productivity surge in the 1990s
The robustness of the evidence
An industry perspective

4 The influence of policy reforms and other factors
Some explanations without punch
ICTs and productivity growth
Education and skills
Policy reforms

5 Trends in living standards

6 Concluding remarks

References

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