Philip Lowe’s parting words to government: think long term, avoid rent caps
RBA governor Philip Lowe has used his final appearance in Canberra to urge politicians to brave up to contentious issues like tax reform, housing supply and productivity to ensure Australians’ living standards don’t go backwards.
With one month left as Reserve Bank governor, Philip Lowe delivered a stark message in Canberra on Friday — the government must fix long-term economic issues or Australians will be much worse off in future.
The problem, as he sees it, is Australia’s lack of productivity growth and the politically difficult nature of the reforms required to pull the nation out of this long-term slump.
“If we don’t find ways of overcoming that then we’ll be in a world of very limited labour productivity growth, which means no increase in wages, no increase in our collective wealth [and] not a bigger pie for government,” Lowe told the House of Representatives Standing Committee on Economics during a public hearing about the RBA’s performance.
Australia’s productivity has been in the doldrums, slowing for the last 20 years along with much of the Western world’s developed economies. Productivity growth was the biggest contributor to the significant uplift in living standards experienced by Australians over the last three decades. Typically, macroeconomic reform has been the enabler of these productivity improvements.
