Are We Measuring Australia's Productivity the Wrong Way?

Productivity is a measure of how much an economy can produce with a set amount of resources. Those resources can be working hours, money, technology, or a mix of all three. For a long time, Australia's economy focused on making physical goods like steel or cars. It was fairly easy to count how many items workers made in an hour. Today, however, much of Australia's economy is built around services — things like health care, education, and community support.

Emeline Gaske is the National Secretary of the Australian Services Union. Her members work in community services, including support for women escaping family violence. She says the current measuring system does a poor job of capturing what her members actually achieve. Her point is that counting tasks isn't the same as counting real results. A nurse who helps one patient avoid a return hospital visit may be doing more valuable work than one who rushes through ten appointments.

The Productivity Commission is the government's official think tank on this issue. Its Deputy Chair, Alex Robson, agrees that the shift from making products to providing human services has made measurement much harder. He says productivity gains in sectors like health and education look very different from gains in manufacturing. Getting the right measure matters, because it affects decisions about wages and government spending. Better measurement could show that Australian workers are contributing far more than the current numbers suggest.

Toby Phillips is the Economic Director of the Centre for Policy Development. He believes we need to start measuring things that truly matter to people's lives. One report found that health care productivity is growing at 3% per year when patient outcomes are counted. A study on education found productivity is 1.3% higher than previously estimated once learning results are included. These numbers might sound small, but in the world of economic growth, they are considered very significant.

All of these experts agree that Australia needs better ways to measure productivity. The current system was built for a manufacturing economy, not a services economy. If the numbers are undercounting real productivity, then Australia's economy may actually be doing better than official figures show. Getting the measurement right is important for workers, because higher measured productivity could lead to higher wages. The debate over how to count what really counts is just getting started.