According to economists, economic growth is important because it allows living standards to rise and more people to find jobs. While the benefits don’t always get distributed evenly, it is generally seen as a starting point for improving household incomes.
Since the 1990s, Australia has performed well in terms of economic growth, aside from a few setbacks such as the Global Financial Crisis. The question is whether this can continue in the face of the significant financial problems plaguing the global economy, not least the size of government debt in many countries. Declining terms of trade and the end of the mining boom are also putting the brakes on.
According to economists, productivity growth - the ability to get more out of a country’s resources - is a crucial ingredient for economic progress. A key means of achieving this is product and process innovation. During the 1990s, Australia's productivity growth was especially high, with an estimated average of 2.2 per cent growth per year. This has been widely attributed to economic reforms during the 1980s and 1990s. More recently, our productivity growth has slowed, with an average of, 1.5 per cent growth per year observed through the 2000s.
As the world changes, and Australia’s economy with it, the challenge will be to ensure we are creating the industries and jobs of the future. One piece of that challenge is to foster a culture of entrepreneurship and innovation for all Australians.
At the same time, we must not lose sight of what’s important in our pursuit of economic outcomes. We need to find ways to maintain individual and collective quality of life while growing our economy.