Productivity Commission opens data dashboard on Australia's stalling output growth

Australia now has a sleek, real-time public tool to track exactly how poorly the country is performing on the one measure that determines whether living standards rise or fall over the long run. The Productivity Commission has launched a productivity dashboard drawing on the latest ABS data, and the dials are pointed somewhere between mediocre and bad.

The five-year trend is the story, not the single-year number

The numbers deserve to be read carefully rather than catastrophised. A single year of 0.3 per cent labour productivity growth for the whole economy is not a crisis; it sits within the Commission's defined "typical" range, which runs from minus 0.5 to plus 3.1 per cent. The problem is the trend sitting beneath that single data point. The five-year average is minus 0.7 per cent. That is not typical. That is a slow leak.

The market sector tells a similar story: 0.4 per cent growth in 2024-25, technically acceptable, but a five-year average of minus 0.1 per cent. The non-market sector, which covers government services including health, education, and public administration, recorded minus 0.1 per cent last year and a five-year average of minus 1.5 per cent. Multifactor productivity, the measure that captures efficiency gains not explained by simply adding more labour or capital, came in at minus 0.53 per cent, placing it squarely in the "below average" band.

The mechanism that eventually translates employment gains into rising real wages is productivity growth, and that mechanism has been idling.

What this means in practice is that Australia has been getting more people into work without getting meaningfully more output per hour of work done. That is not unusual during an employment boom, and the country did run a strong labour market through the pandemic recovery. But the mechanism that eventually translates employment gains into rising real wages is productivity growth, and that mechanism has been idling.

The dashboard is a political act, not just a data release

This is where the dashboard's existence becomes quietly pointed. The Productivity Commission did not build a public-facing, real-time tracking tool because everything is fine. They built it because the policy conversation in Canberra has drifted away from supply-side reform toward demand management and cost-of-living relief, and someone at the Commission appears to have decided that making the trend impossible to ignore was worth doing in public rather than in a submission that sits in a parliamentary inbox.

There is an obvious irony in deploying a state-of-the-art analytical instrument to demonstrate a deterioration in national output efficiency. The dashboard itself is a genuine piece of public infrastructure: clear, well-designed, regularly updated, and free to access. It does exactly what it sets out to do. Whether the policy response matches that standard is a different question.

The non-market sector result is the number the government would prefer not to discuss

The non-market sector result is arguably the most instructive figure in the dataset. Governments have spent heavily on services since 2020, through COVID support, the NDIS, aged care, and a significant expansion of the public sector headcount. That spending may well have been warranted, and some of it certainly was. But spending more to deliver the same or less output per hour is, by definition, a productivity fall. The political difficulty is that this is precisely the kind of finding that invites the response: "you can't measure care." Which is true, up to a point. But it is also a convenient position to hold when the numbers are moving in the wrong direction.

None of this amounts to an argument that Australia is in structural decline. The typical range for labour productivity growth runs up to 3.1 per cent on a whole-economy basis, which means the country has hit those numbers before and could again. The Commission's own historical data going back to 1978 shows cycles of underperformance followed by recovery, usually when reform opened up competition, reduced regulatory drag, or unlocked investment in technologies that changed the production frontier.

The question the dashboard is implicitly asking is whether anyone in a position to drive that kind of reform is thinking about it seriously. The finger is in the air. What comes next depends on whether anyone decides to do something about the wind.

Sources

Productivity Commission — Australia's Productivity Performance Dashboard

Frequently Asked Questions

What is Australia's current labour productivity growth rate?
Australia's labour productivity grew 0.3 per cent in 2024-25, which sits within the Productivity Commission's defined typical range of minus 0.5 to plus 3.1 per cent. The more concerning figure is the five-year average of minus 0.7 per cent, which falls below that typical band entirely.

Why does productivity growth matter for wages?
Productivity growth is the mechanism by which employment gains translate into rising real wages — without it, wage increases must be funded by redistribution or debt rather than genuine output gains. Australia has run a strong labour market in recent years, but without matching productivity growth, the wages and living standards Australians expect become increasingly difficult to sustain.

Why is Australia's non-market sector productivity falling?
Governments have significantly increased spending on health, education, the NDIS, aged care, and public administration since 2020, but that spending has not produced proportional increases in measured output per hour worked. Spending more to deliver the same or less output is, by definition, a productivity fall — though proponents argue that care-based services are difficult to measure accurately.

What is multifactor productivity and why does it matter?
Multifactor productivity measures efficiency gains that cannot be explained simply by adding more workers or capital — it captures whether an economy is getting smarter and better organised, not just bigger. Australia's multifactor productivity came in at minus 0.53 per cent, placing it in the below-average band and suggesting the current weakness is not just a headcount story.

Has Australia recovered from productivity slumps before?
Yes — the Productivity Commission's historical data going back to 1978 shows cycles of underperformance followed by recovery. Past recoveries have typically followed reforms that opened up competition, reduced regulatory drag, or unlocked investment in technologies that shifted the production frontier.