Senate Economics Legislation Committee [Part 2], , 2:52:53 to 2:57:57
The Productivity Commission discusses stagnant productivity levels, the relationship between labor hours and output, and negative contributions from the mining and construction sectors.
Topics: Employment, Efficiency dividend
Speakers: Senator Jane Hume, Danielle Wood, Senator Lisa Darmanin, Unknown Speaker
>> Thank you chair. I promise I'm going to try and do this very quickly tonight. So we'll we'll try and help each other. Uh first and foremost, your September update calls the picture of the national June national accounts stagnant. Is that the commission's assessment today?
Uh Danielle Wood chair uh I mean we were making the observation that productivity uh has not moved over the past year and that was the uh the term we chose to describe that phenomenon.
>> Okay. Um the June national accounts GDP grew by4% in the quarter and GDP per hours worked. What happened there?
>> Uh from memory um it moved by the same
amount cuz I think productivity oh no in the quarter it would have um >> grown by less from memory cuz the the productivity went back by.3.
>> So I'm just trying to interpret that data. So that means we produce more in total but not more per hour worked. Is that right? >> So we're working harder but getting less
>> work getting less per hour. Yes.
>> Okay. And over the year to June GDP increased 2.1% but labor productivity fell 2%. Are those figures
Uh the 2% doesn't sound
>> GDP increased 2.1 in the year to June. >> Labor productivity over the same period fell. 2%.
>> Oh 2. Yes.
>> So uh would it be fair to say then that the growth in output over that year is driven more by labor hours rather than producing more per hour? So effectively more participation rather than productivity.
>> That's right.
>> Okay. Terrific. Um you also reported in a 6% decline in the March quarter. Can you identify for me just how much of that June result was a rebound and how much of it reflects sort of a sustainable change in trend?
I mean the the quarterly data I think as we've talked about before does bounce >> around a lot. Um the other challenge with the quarterly data is uh we know going back through history that there will be revisions um that can substantially change those numbers as well. Um so when we tend to look at the data and um draw conclusions about trends we tend to use a kind of longer time series. We don't really focus on the the quarterly numbers.
>> Okay. Uh can I ask about the labor productivity and the industries that make positive and negative contributions to whole of economy labor productivity? Do you know like the top three top four five industries that made the largest negative contribution to labor
productivity? Uh I think over the 12 months um it was mining and construction were the the big falls. Um mining um uh moves around a lot according to capital cycles uh and construction um has uh not performed uh well over an extended period.
Can I ask is the commission forecasting a turnaround or is it um when it talks about in the June quarter real unit labor costs rose sorry I'm going to go back and start again in the June quarter real unit labor cost rose.9%. with all else being equal, does that mean that weak productivity growth makes it harder to accommodate the wage rises without cost pressure? That seems to be what I know that the governor has spoken the governor of the Reserve Bank spoken about that before that unless you have productivity rises, you can't have wage rises without or growth without causing inflation. Is that right? Is that
something? So the I mean the way the governor talks about it which I think is a good way to think about it is sort of productivity sets the speed limit of the economy. Um over time uh so over the long term we expect to see a relationship between productivity and and wage rises and so you know if productivity is stagnant over an extended period it does make it harder um to have wage rises without cost pressures as you say.
>> Yeah. Okay. I have some questions that I want that I want to get into on that data but I'm not going to do them today. I will put them on notice just for the sake of getting through some of these questions a little quicker. Uh I want to talk to you specifically about uh the productivity benefit of the mandatory climate climate reporting that's coming in. Um and specifically about the compliance activity that's involved with that. Uh would the productivity commission agree that compliance