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Unpicking productivity

06 March 2013

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The HC Coombs Policy Forum is a strategic collaboration between the Australian Government and ANU, at the Crawford School of Public Policy. It focuses on supporting policy-relevant exploratory and experimental work at the interface between government and academia.

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Productivity: it’s a word that has captured the public, political and media imagination over the last few years as Australia considers its impact on the economy. But what does productivity actually mean? And what happens if we aren’t able to make satisfactory progress in increasing it?

Those are some of the key questions addressed in a new issues paper by Dean Parham and Dr Christopher Vas of the HC Coombs Policy Forum at Crawford School. The paper is released today in the lead up to the trans-Pacific dialogue ‘Creating a Productive Future’.

The paper, Demystifying Productivity for Better-Informed Policy, aims to bring attention and raise awareness of productivity and the policy challenges in raising productivity. The paper sets out an agenda of issues that will be crucial in determining Australia’s productivity and the wellbeing of Australians over coming decades.

Vas said the first important step was being clear about what the term productivity actually means.

“Productivity is a loaded term and a common proxy when it comes to its use in policy circles,” he said.

“A simple online search on the term will result in many millions of connotations ranging from definitions, individual productivity issues, measurement and statistics to the other end of the spectrum that informs us of tools and technological products that can help with lifting productivity.”

Parham added that there needs to be much more thought and discussion about Australia’s productivity challenges outside of narrow political and ideological debates.

“We need to think about where Australia’s long-term future opportunities for productivity growth might lie in an increasingly-globalised and rapidly-changing world and in an economy based more heavily on resources and services. And we obviously need to think about what we need to put in place to seize those opportunities.

“We need sound investments in human capital and economic and social infrastructure. We need a policy framework that encourages and enables firms to innovate and be productive.  And the focus on productivity needs to fit with broader social and environmental concerns,” he said.

Vas added that while it may seem obvious to suggest that these aspects are relevant and matter in terms of raising productivity, their importance and value is less clear when sector specific competitiveness is explored.

“For example, research conducted by the Society for Knowledge Economics in the services sector shows that a high performance workplace ethos can lift performance and bottom line company performance by 12 to 15 per cent. That’s a significant increase, but how do we use similar management systems and, say, technology to generate similar performances in the resources or construction industries?

“Furthermore, in a resource abundant country like ours, how do we achieve a desired effect of ‘carbon productivity’ what the McKinsey Global Institute refers to as increased GDP per unit of carbon emission?”

Vas said the paper is an important step in a process to bring the pieces together on some of these puzzles.

“There are myriad questions that arise in the productivity context and we need to start unpicking some of these problems from a systems perspective. This paper sets out a starting point for the conversations that are to follow,” he said.

The paper can be downloaded here: http://crawford.anu.edu.au/hc-coombs/content/policy_research_programs_productivity.php?tb=3#tb3

Videos, slides, papers and mp3 files from this event are available at: https://crawford.anu.edu.au/events/content/more.php?id=8801

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