CEO Update: Productivity is now a cost-of-living issue

Positivity seems lacking on the economics front over the past two weeks, especially in the context of households. 

New CEDA analysis of the ‘Misery Index’ to be released this week shows Australians’ economic misery now has comparable levels seen during the post-pandemic inflation surge, with the pick-up driven by headline inflation, unemployment and interest rates all trending higher this year. 

Add to that flatlining per capita GDP growth and falling house prices – albeit on the back of record growth – and it is not surprising that the October Westpac-Melbourne Institute survey saw consumer sentiment fall again to a six-month low. 

While there is more at play than simply higher oil prices, to quote the Treasurer commenting on the latest inflation data, “From an economic point of view, the conflict can’t end soon enough”.

In one positive development, the final budget outcome for 2025-26 was better than forecast, on the back of lower-than-expected real payments growth and higher receipts from stronger super fund and investment income. These are cyclical rather than structural sources of improvement, and with plenty of headwinds there is little room for complacency, notwithstanding Australia’s relatively strong debt position. 

The updated budget figures also confirm the strength of private relative to public demand. The challenge now is to ensure that the investment uptake we are seeing supports a sustained uplift in innovation and productivity.

AI adoption trends are critical to this. CEDA is working with the UNSW Business School’s Business AI Lab, the National AI Centre and Gilbert + Tobin on a joint study on AI adoption. If you haven’t already done so, I encourage you to participate in the survey. It takes less than ten minutes to complete and will provide a rich source of insight for policymakers currently grappling with Australia’s AI transformation.

I will be speaking this week at the ACCC’s Competition Summit in Sydney, and productivity, innovation and dynamism will definitely be a focus. With potential growth now hovering around 2 per cent, and in the face of plenty of challenges, there is little wiggle room when it comes to sustaining prosperity and living standards. Genuinely reigniting dynamism and innovation has never been more important.

Migration continues to dominate public debate across the political parties. I had the opportunity to talk about recent migration trends and to take a longer-term perspective on ‘The Economy, Stupid’ podcast with Peter Martin and Mark Cully. You can listen to that interview here. 

One of the points I made in that conversation is that whatever your views on the ‘right’ level and composition of migration, sharp reductions will have economic consequences.

In research work to be released shortly, we show for example, that in 2022-23, secondary visa holders earned nearly $3 billion in wages. CEDA will continue to be a voice in support of a steady and sustainable approach to migration, including to allow skills shortages to be addressed in critical areas like construction and care. 

Last week Perth welcomed the World’s first Future Generations Commissioner, Sophie Howe, to an intimate CEDA Trustee roundtable. Sophie provided insights into her time as the Welsh Future Generations Commissioner where she shaped legislation in Wales for the benefit of future generations. WA also held a Trustee Roundtable with WA Department of Energy and Economic Diversification Deputy General Rebecca Brown, who spoke about WA’s energy futures. 

Join us at CEDA’s AI Leadership Summit in Sydney on 27 and 28 October as we examine how organisations can turn investment in AI into genuine productivity growth.

In Perth, join the Hon. Amber-Jade Sanderson, Minister for Energy and Decarbonisation, and industry leaders at Energy Outlook WA on 28 October to explore the investment, infrastructure and policy settings needed to secure the state's energy future and economic growth.

In Sydney, Health Delivery NSW on 5 November will bring together government and health sector leaders, including NSW Health Minister Ryan Park, to examine practical solutions to workforce challenges, service delivery and digital transformation to build a more connected and effective health system.