Productivity, Not Interest Rates, Behind Cost of Living Challenges

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

In a recent interview, former Reserve Bank of Australia (RBA) governor Philip Lowe addressed the blame often placed on high interest rates for Australia's cost of living issues.

Contradicting common perceptions, Dr.

Lowe pointed to a lack of productivity growth as the actual source of the problem.

Despite decade-high interest rates, he emphasized that these rates have only marginally suppressed demand, while the drag from stagnant productivity over the years has had a much greater impact.

Dr. Lowe believes this productivity problem is fundamentally political rather than economic. According to him, the main issue is society's declining ability to forge coalitions capable of implementing necessary, albeit challenging, reforms that would ultimately benefit future generations. His analysis suggests that productivity improvements are key to addressing discontent with living standards, which have stopped increasing at the robust pace seen in previous decades.

Federal Treasurer Jim Chalmers has acknowledged the pressing nature of this productivity issue, highlighting a $900 million fund designed to bolster productivity across the nation. Earlier, Dr. Chalmers had noted that Australia's productivity slowdown dates back over two decades and mirrors trends seen in other developed nations. The government's new policy encourages states and territories to engage in competitive policies and adopt approved projects, such as modernizing planning and construction methods, to spur economic growth.

Current RBA governor Michele Bullock has echoed Dr. Lowe's concerns, linking productivity improvement directly with enhanced living standards and wage growth potential. Ms. Bullock emphasized that productivity growth is crucial to allowing wage increases without triggering inflationary pressures, making it a critical focus area for economic policy.

As Treasurer Chalmers prepares to present the forthcoming government budget, he maintains a focus on responsible fiscal management, supporting affordable cost-of-living measures, and fostering a productive and dynamic economy. These efforts aim to lay a foundation for long-term economic resilience and prosperity in Australia.

Published:Tuesday, 4th Mar 2025
Source: Paige Estritori

Please Note: If this information affects you, seek advice from a licensed professional.

Share this news item:

Finance News

Isuzu Australia Unveils Dedicated Financial Services for Truck Buyers

08 Jan 2026: Paige Estritori

In a strategic move to bolster its customer support offerings, Isuzu Australia Limited (IAL) has announced the establishment of Isuzu Financial Services Australia (IFSA). This initiative marks the first time the Isuzu Group has founded a leasing company outside Japan, reflecting a significant commitment to the Australian market. - read more

CEFC and Volvo Group's $70 Million Initiative to Boost Electric Truck Adoption

08 Jan 2026: Paige Estritori

The Clean Energy Finance Corporation (CEFC) has partnered with Volvo Group to introduce a $70 million financing package aimed at accelerating the adoption of heavy-duty battery electric trucks (HD BEVs) in Australia. This initiative seeks to address the substantial transport-related emissions by facilitating the transition to cleaner vehicle technologies. - read more

Australian Truck Sales Experience Decline as Market Stabilises in 2025

08 Jan 2026: Paige Estritori

The Australian truck and van market has experienced a notable decline in 2025, with sales figures indicating an 11.8% decrease compared to the previous year. According to the Truck Industry Council (TIC), a total of 33,727 heavy vehicles were sold by the end of September, marking a significant drop from the 38,254 units sold during the same period in 2024. - read more

CEFC and Volvo Group's $70 Million Initiative to Boost Electric Truck Adoption

31 Dec 2025: Paige Estritori

Scania's First Electric Truck Joins Total Logistics Solutions Fleet

31 Dec 2025: Paige Estritori

Total Logistics Solutions (TLS), a rapidly growing Australian logistics provider, has taken delivery of its first battery electric truck from Scania. This milestone marks a significant step towards greener last-mile deliveries in urban areas. - read more

Click for more Finance News

Truck Loans Articles

Maximizing Your Fleet Budget: Comparing Used vs. New Truck Costs

When it comes to expanding a commercial fleet in Australia, the decision between purchasing new or used trucks can have a significant impact on your budget. With this article, we aim to delve into the critical considerations that fleet owners must make in juxtaposing the costs of new verses used trucks, meticulously unraveling the financial layers to guide you towards a choice that aligns with your company's fiscal strategy. - read more

Balloon Payments, Residuals and Their Place in Your Truck Loan

The pursuit of a quality truck or fleet can be a significant undertaking for any business, especially within the dynamic and ever-expanding Australian transport industry. An understanding of the variety of financing options available within this sector is crucial, as it allows businesses to strategically acquire heavy vehicles that are vital to their operations. - read more

The Ultimate Guide to Truck Loan Terms for Commercial Vehicles

Getting a truck loan is a significant financial commitment, especially for commercial vehicles. Understanding the terms of your truck loan is crucial for managing your finances effectively and ensuring that you can meet your repayment obligations. - read more

How to Find the Best Commercial Vehicle Loan Rates for Your Business

Securing the best commercial vehicle loan rates is crucial for the financial health of your business. As a business owner, getting favourable loan conditions can have a significant impact on your bottom line. Lower rates translate to reduced monthly payments and overall loan costs, freeing up capital for other essential aspects of your business. - read more

Dealer Negotiations: Smart Tips for Australian Commercial Truck Buyers

Navigating the used truck market in Australia can be as complex as the rugged terrains these vehicles traverse. With the market growing steadily, the need for savvy bargaining and well-informed purchases has never been more critical. The significance of due diligence escalates when considering the investment at stake and the pivotal role these trucks play in driving businesses forward. - read more

Start Here

Get a free truck loan eligibility assessment and compare truck finance and leasing options without accessing your credit file!!

Knowledgebase

Debt-to-Equity Ratio:
A measure of a company�s financial leverage, calculated by dividing its total liabilities by stockholders� equity.