Aussie Incomes Lag in OECD Amid Productivity Concerns

0

Recently released data from the Australian Bureau of Statistics signal a slight turnaround, with incomes rising by 2.4% in the 2024-2025 fiscal year—the most significant increase since late 2021. However, incomes are still 6.9% below their peak during the COVID-19 pandemic in mid-2022, returning to levels similar to 2020.

Veteran economist Chris Richardson has cautioned that without improvements in productivity, Australian incomes may not reach their pandemic-era peak until 2037. He attributes the recent increase to temporary factors, such as stage three tax cuts, lower inflation, and reduced interest rates, rather than sustained economic health.

Richardson states that unless productivity significantly improves, any gains in income will be unsustainable. He further suggests that if the Reserve Bank's forecast of a 0.7% annual productivity growth holds—a figure already optimistic compared to recent performance—Australian living standards may only climb back to their 2021 height by 2037.

The prospect of productivity growth appears challenging, given government strategies involving high levels of low-skilled immigration and increasing energy costs associated with achieving net-zero emissions. These factors could contribute to stagnant productivity, deteriorating living standards, and further deindustrialisation in Australia.

As policymakers and industry leaders grapple with these issues, significant measures to bolster productivity will be essential in reversing the current trajectory and securing long-term prosperity.

Published:Tuesday, 9th Sep 2025
Source: Paige Estritori

Share this news item:

Finance News

Clear

ASIC Releases Updated Legislation for Financial Advice

16 Sep 2025: Paige Estritori

The Australian Securities and Investments Commission (ASIC) has introduced a new, consolidated legislative instrument that relates to financial advice. This update follows through on ASIC's May announcement regarding the remake of three existing advice-related instruments. - read more

Commonwealth Bank Challenges RBA's Card Fee Reform

12 Sep 2025: Paige Estritori

Australia’s leading financial institution, the Commonwealth Bank of Australia, has openly criticised the Reserve Bank of Australia (RBA) for its calculations related to a proposed reduction in debit and credit card transaction fees. The RBA suggested that the reform would save Australian businesses $1.2 billion annually and benefit the majority of companies, a claim that the Commonwealth Bank strongly disputes. - read more

Ongoing Consumer Spending Surge Threatens Future Interest Rate Cuts

11 Sep 2025: Paige Estritori

Amid a period of robust consumer spending, Australia's mortgage holders may face limited future interest-rate cuts. The Commonwealth Bank has observed Australians increasing their spending over the last six months, spurred by rising incomes, a robust job market, and previously lowered interest rates. - read more

CSLR Funding Concerns as Special Levy Decision Remains Pending

11 Sep 2025: Paige Estritori

The Compensation Scheme of Last Resort (CSLR) recently highlighted potential delays in compensation payments due to insufficient special levy funds. In July, the CSLR's proposed FY2025–26 levy plan allocated $67.29 million for financial advisers, surpassing the $20 million limit set for the subsector. This shortfall of $47.29 million prompted the Treasury to initiate a consultation in August to determine funding solutions for the excess levy. - read more

Retiree Surge to Drive Demand for Financial Advisers in Australia

10 Sep 2025: Paige Estritori

A recent study by Adviser Ratings, as outlined in the 2025 Australian Financial Advice Landscape Report, indicates that the number of financial advisers in Australia will need to increase significantly. From the present count of 15,500 advisers, the industry is expected to require more than 50,000 over the next thirty years to cater to a growing retiree population. - read more

Click for more Finance News