Faculty of Business and Law School of Accounting, Economics and Finance
ECONOMICS SERIES
SWP 2010/15
Microeconomic reform and productivity in
Australia – boom or blip
MARGARET MCKENZIE
The working papers are a series of manuscripts in their draft form. Please do not quote without obtaining the author’s consent as these works are in their draft form. The views expressed in this paper are those of the author and not necessarily endorsed by the School or IBISWorld Pty Ltd.
Microeconomic reform and productivity in Australia – boom
or blip*
MARGARET MCKENZIE
School of Accounting, Economics and Finance, Deakin University, Melbourne
Australia.
Abstract: Increased aggregate productivity growth in the 1990s has been taken to
indicate support for the success of microeconomic reform policy in Australia. The
Productivity Commission / Australian Bureau of Statistics key estimates of peak to
peak market sector multifactor productivity growth since the mid 1960s are examined
in this paper. The peak to peak market sector measures are compared with five year
averages. Series are reconstructed for the whole economy, and simple regression
estimates obtained. The findings lend support to a spike in the measure in the 1990s
rather than sustained increase and highlight the sensitivity of the estimates to cyclical
and unknown factors.
I Introduction
Microeconomic reform policy in Australia was anticipated to bring forth large returns
in terms of productivity improvement for the economy. It was argued in 1999 that
measured aggregate productivity increases were due at least in part to microeconomic
policy and could be taken as a sign of successful policy direction. The Productivity
Commission (PC) found that research added ‘weight to the view that microeconomic
reforms are contributing to an enduring transformation of the Australian economy and
its economic performance’ (PC 1999 piii). Much of the improved productivity
performance that the PC argued to be observed in the Australian economy through the
1990s appeared to come from ‘transformation in the production side of the Australian
economy since the 1980s’ (PC 1999 pxv). In 2005 the PC argued that the surge in
productivity growth had underpinned 13 years of uninterrupted output growth to
2003-04. It cited productivity growth rates for the five year cycle to 1998-99 as the
highest for at least forty years. The slowing in productivity growth after 1999 was
seen as attributable to ‘temporary phenomena such as the drought’ and a recovery was
indicated for 2003-04 (PC 2005 ppxvi-xvii).
This paper investigates the measure of aggregate productivity increase that has been
used in considering the overall impact of microeconomic reform. Ex post and
aggregate evaluations are few. The Productivity Commission / Australian Bureau of
Statistics [PC/ABS] estimates of productivity for the Australian economy since the
mid 1960s have indicated that a productivity ‘surge’ has occurred in recent years.
This has been taken as a sign of a positive contribution of microeconomic reform to
the Australian economy. The productivity measure used is ‘multifactor productivity’
(MFP). This is the contribution to growth of a combined measure of capital and
labour (and other unmeasured) inputs for a ‘market’ sector which made up around 62
* I would like to thank Monica Keneley, John Quiggin, John Shannon, and seminar participants at
Deakin University, the Australian Conference of Economists 2005 and others for valuable comments
on earlier drafts.
JEL classifications C22, E61, L50, O47
2
per cent of the economy at 2002-03. This partial measure of productivity was used in
order to exclude non market output where output is largely measured at cost.
The use of MFP over time as obtained by averaging the annual MFP figures between
productivity growth peaks is investigated in this paper, inter alia by comparison with
computed five year averages. The use of ‘market sector’ measures of productivity is
also evaluated in the paper by reconstructing the estimates using data for the whole
economy and comparing the results with those for the market sector. The results of
some simple regressions are also considered.
The structure of the paper is as follows. The following Section (II) identifies the
character of microeconomic reform policy in Australia and reports the outcomes
anticipated from estimates of the contribution of microeconomic reform to the
economy mainly based on sectoral general equilibrium (GE) and benchmarking
methodologies. In Section III the key methodology used by the PC to evaluate the
aggregate outcomes over time as related to peak to peak MFP measures for the market
sector is compared with alternative five year averages. The methodology is then
applied to the data for the whole economy in Section IV and the findings are
compared with those for the market sector. Section V reports the results from some
simple regression estimates, and Section VI provides the conclusion.
II Microeconomic reform policy in Australia and its outcomes
A major reason given for the support from the 1980s for microeconomic reform
policy in Australia has been that it would reap productivity gains for the apparently
underperforming Australian economy, following the British policy approach under
Thatcher. ‘Microeconomic reform’ is referred to here as the Australian policy version
of measures intended to deregulate the economy. The emphasis is on promoting
productive and allocative efficiency in the short and long run through enabling the
exercise of market forces. According to the PC (1999), microeconomic reforms are
directed ultimately at improving living standards by improving economic efficiency.
The reforms were expected to improve productivity by improving allocative
efficiency, through enhancing flexibility so that investment, employment and other
resources would be drawn to more productive activities. They would improve
technical efficiency by upgrading technologies, management and work practices
towards ‘best practice’, and gain more from specialisation and economies of scale.
Dynamic efficiency would come from upgrading skills and innovation, improved
incentives to seek out productivity improvements and the encouragement of greater
flexibility (PC 1999 p16). By contrast Quiggin finds allocative gains with little impact
on productivity and growth (Quiggin 1998a).
Quantitative evaluations of the gains from microeconomic reforms have taken a range
of approaches of which the partial and ex ante have tended to predominate. As time
has elapsed since reforms have occurred so approaches to evaluation have changed
and become more sector specific. This paper focusses on the evaluations of overall
gains based primarily on the approach taken by the Australian Bureau of Statistics and
Productivity Commission to measuring productivity growth over time.
(i) Forecasts of the impact of microeconomic reform on growth
Forecasts for the outcomes of microeconomic policy implementation give a flavour of
the level of expectation and the scale of optimism involved and the manner in which
3
these have changed. In 1994 the key policy document Working Nation referred to an
EPAC working paper which suggested that ‘existing policies and key decisions’
already then taken ‘may accelerate labour productivity growth by an average annual
amount approaching half a percentage point through to the turn of the century’
(Working Nation p21). The Industry Commission (IC, predecessor of the PC) had in
1990 produced a GE based estimate of a maximum gross 6.5 per cent added to GDP
from microeconomic reform on infrastructure areas, with the usual GE provisos
(Forsyth ed 1992 p15, citing IC 1990). Based on GE modelling of many of the
Hilmer recommendations for reform [to competition policy], the PC estimated that
Australia’s real GDP would be 5.5 per cent higher once the productivity gains, service
price rebalancing and other changes associated with the reforms had fully worked
their way through the economy assuming the achievement of world best practice
productivity levels (PC 2004 p46, citing IC 1995).’
(ii) Estimates of the overall contribution of microeconomic reform to growth
Observation based or ex post evaluations of the outcomes of microeconomic reform,
particularly at the aggregate level remain thin on the ground. The key quantification
of the overall outcome of microeconomic reform that can be characterised as ex post
or observation based is presented in productivity estimates by PC/ABS. These
findings are distinguished from forecasts or analytical predictions as in the earlier
estimates referred to above.
The PC (1999) made use of these estimates in its findings and noted ‘a marked
improvement in Australia’s rate of productivity growth in the 1990s’, in fact a record
peak. ‘Multifactor productivity (MFP, ‘combined capital and labour productivity’)
grew at 2.4 per cent a year from 1993-94 to 1997-98, compared with an average of 1.2
per cent a year from 1964-65 to 1993-94’ (PC 1999 pxvii). This was seen as a
reversal in a decline in productivity growth since the late 1970s which helped restore
the rate of growth of average living standards in the 1990s. It reversed Australia’s
long term poor performance compared with other high income countries, decline in
capital productivity, and the slower post War productivity catch up. The PC argued
this was most attributable to capital productivity movements arising from diminishing
returns to capital from capital deepening, along with increases in capital productivity
due to improvements in overall efficiency arising from ‘better allocation of
investment, greater specialisation, and better management practices and work
arrangements’ (PC 1999 ppxix-xx). It was argued that 0.4 of the 2.4 per cent
productivity increase for 1993-4 to 1997-98 was due to changes in industry
composition, as employment moved away from traditional industry including utilities
towards services, and investment moved from buildings towards computers and
telecommunications (PC 1999 ppxxvi-xxvii). Adoption of new technologies had
accelerated since the mid 1980s but the direct effect on productivity as measured was
muted. The workforce had become better educated according to school retention rates
and an increased emphasis on skills and training (PC 1999 ppxxix-xxx).
Measurement error was not a likely source of the measured productivity increase (PC
1999 pxxxvi). It was argued that the productivity surge would not have happened
without the reforms (PC 1999 pxxxix). According to the PC 2004 ‘Australia’s
productivity surge in the 1990s represented a significant break from past trends’ (PC
2004 p43).
4
Parham (2002) supported the PC’s position that the productivity surge was promoted
by microeconomic reform. Quiggin (2004) argued that the noncyclical productivity
increases of the 1990s were not large and the returns to microeconomic reform were
patchy.
III Productivity estimates for Australia
The basis for the finding on productivity growth rates is examined from the standpoint
of what is regarded as the key measure, the ABS data presented in PC 1999 and
updated in the PC’s Review of National Competition Policy Reforms (2004) (draft)
and (2005) (final).
The PC made use of productivity estimates based on ‘improved’ measurements of
output, capital inputs and productivity from the ABS in order to examine aggregate
trends in productivity performance (PC 1999 p23, citing ABS 1999 Feature Article).
The productivity measure is calculated for the ‘market sector’ which is quoted to be
about 62 per cent of GDP in 2002-03. This was done on the grounds that aggregate
output can be meaningfully measured for productivity calculations in the market
sector because the ‘non market sector includes areas such as public administration and
defence where outputs are normally measured in terms of expenditures’ (PC 1999
p23, footnote), and is in line with the agreed OECD approach of recent years.
The productivity estimates presented in PC 1999 were ABS (‘experimental’)
estimates of ‘multifactor productivity’ (MFP) (ABS 1999 p8). ‘MFP statistics
provide a measure of changes in the efficiency of production. MFP is the ratio of the
measure of output to two or more factor inputs. In this case a combined measure of
labour and capital inputs is used to obtain the measure of MFP. MFP represents that
part of the change in production that cannot be explained by changes in the measured
inputs’ (ABS 1999 p14). The ABS indicates that because the inputs measured are
capital and labour, ‘not all changes in all inputs are taken into account’ so that MFP is
a better term than total factor productivity. The data and methodology by which the
MFP measure is obtained is returned to later.
(i) Periodisation
The annual average growth rates shown in Table 1 are based on a period from
1964-65 to 2003-04 ie 40 years. This period is partitioned into periods ‘identified by
the ABS as productivity cycles – from productivity peak to productivity peak’ (PC
1999 pp23-24). The periods are thereby of unequal length described as 1964-65 to
1968-69 (5 years), 1968-69 to 1973-74 (5 years), 1973-74 to 1981-82 (8 years), 1981-
82 to 1984-85 (3 years), 1984-85 to 1988-89 (4 years), 1988-89 to 1993-94 (5 years),
1993-94 to 1998-99 (5 years) and 1998-99 to 2003-04 (5 years).
The source data provided in index form in spreadsheet 5204022 from ABS Cat 5204.0
up to 2003-04 is shown in Chart 1. The peak to peak basis for the PC/ABS
periodisation is not always pronounced in the MFP index series.
5
Chart 1 Annual average output, total inputs and MFP, market sector 1964-65 to
2003-04, index 2002-03=100
1998-99
1993-94
1988-891985-86
1981-821973-74
1968-69
0.0
20.0
40.0
60.0
80.0
100.0
120.0
1964
-65
1965
-66
1966
-67
1967
-68
1968
-69
1969
-70
1970
-71
1971
-72
1972
-73
1973
-74
1974
-75
1975
-76
1976
-77
1977
-78
1978
-79
1979
-80
1980
-81
1981
-82
1982
-83
1983
-84
1984
-85
1985
-86
1986
-87
1987
-88
1988
-89
1989
-90
1990
-91
1991
-92
1992
-93
1993
-94
1994
-95
1995
-96
1996
-97
1997
-98
1998
-99
1999
-00
2000
-01
2001
-02
2002
-03
2002
-03=
100
Market output Market MFP Market total inputs
Source: ABS Cat 5204.0 spreadsheet
The MFP growth rates measures for each period are an average of the annual average
MFP growth figures over that period (apparently excluding the starting year for each
period where it is included in the previous period). The periodisation is itself
dependent on the calculation of MFP which is clearly subject to the impact of variable
capacity utilisation on the combined inputs measure among other things. The effect
of the presentation of the different period lengths is to favour the annual productivity
growth measures within the shorter periods relative to those years in the longer
periods. In particular the long period in the 1970s after the oil price shock is de
emphasised. Moreover the approach is sensitive to end periods which are not
necessarily peak to peak, and any findings for the influence of microeconomic reform
are sensitive to the recent end data point. Addressing cyclicality is a well known
problem, and the approach to periodisation taken here appears somewhat arbitrary at
best. Periodisation in such a manner also makes cross country comparison difficult in
that it is specific to Australia.
As PC 1999 indicated there is no coincidence between regime changes or stages with
regard to microeconomic reform. Of course these are difficult to characterise in
aggregate. There is no particular reason for assuming the impact of microeconomic
reforms would be reflected in short period peak to peak productivities over time. The
PC 1999 Figure 3.1 presented the average productivity increases for the above periods
to 1997-98 (PC 1999 p24). The data for PC 1999 Figure 3.1 (from ABS Cat 5204.0)
are reproduced in Table 1 in the third, fourth and fifth columns. The two most recent
periods, 1993-94 to 1998-99, and 1998-99 to 2003-04 are updated from the ABS Cat.
6
Table 1: Peak to peak average annual productivity growth rates, per cent,
market sector
Period Number
of years
Inputs
ave
annual %
growth
rate
MFP
ave annual
% growth
rate
Inputs + MFP
= output
ave annual %
growth rate
MFP/Output
growth rate,
per cent
1964-65 to 1968-69 5 3.8 1.3 5.1 25.5
1968-69 to 1973-74 5 2.9 1.6 4.5 35.6
1973-74 to 1981-82 8 1.0 1.1 2.1 52.4
1981-82 to 1984-85 3 0.9 0.9 1.8 50.0
1984-85 to 1988-89 4 3.5 0.6 4.1 14.6
1988-89 to 1993-94 5 1.1 0.7 1.8 38.9
1993-94 to 1998-99 5 2.6 2.0 4.6 43.5
1998-99 to 2003-04 5 2.2 1.0 3.2 31.3
Source: ABS 5204.0, after PC 1999 T3.1, p24.
nb average excludes the starting year for each period where it is included in the previous period
The last column shows the ratio of multifactor productivity growth to total output
growth ie the residual after the contribution of input growth is removed. Chart 2
presents the data set out in Table 1, based on PC 1999 Figure 3.1 and updated.
The annual average multifactor productivity (MFP) growth shown in Table 1 is 2.0
per cent for the five year period 1993-94 to 1998-99, while inputs grew 2.6 per cent in
that period. While this might be taken to indicate a surge in productivity growth in
the 1990s, it was followed by a growth rate of 1.0 per cent in MFP and a growth rate
of 2.2 per cent in output for the period 1998-99 to 2003-04. The annual average
output growth rate of 4.6 per cent reported for the five year period 1993-94 to 1998-
99 is no more than the average for the first two five year periods shown, from 1964-65
to 1973-74, while the MFP growth rate is around half a per cent higher. It should be
noted that the MFP figure of 2.6 per cent growth rate reported in PC 1999 for the four
year period 1993-94 to 1997-98 was taken as an indication of an unprecedented
increase in productivity growth at the time, however the inclusion of the year 1998-99
in later estimates apparently reduced this back to a growth rate of 2.0 per cent (ABS
1999 p17).
At the same time the growth rate of inputs has fluctuated widely across the periods.
Input growth rate was 3.5 per cent in 1984-85 to 1988-89 falling to 1.1 per cent in the
following period 1988-89 to 1993-94, before recovering to 2.6 per cent growth rate in
the last period 1993-4 to 1998-99.
7
Chart 2 Average annual growth rate of inputs, MFP and output, market sector,
1964-65 to 2003-04, peak to peak, per cent.
0.0
1.0
2.0
3.0
4.0
5.0
6.0
1964-65 to
1968-6
9
1968-69 to
1973-7
4
1973-74 to
1981-8
2
1981-82 to
1984-8
5
1984-85 to
1988-8
9
1988-89 to
1993-9
4
1993-94 to
1998-9
9
1998-99 to
2003-0
4
avera
ge a
nn
ual
per
cen
t
Market inputs growth Market MFP growth Market inputs+MFP = output
Source: ABS 5204.0, after PC 1999 T3.1, p24.
nb average excludes the starting year for each period where it is included in the previous period
The period growth rate averages for the 40 year period shown in Table 1 may be re
calculated to correspond to 5 year intervals, (again as in the apparent PC approach of
excluding the starting year for each period where it is included in the previous period).
There is no good reason for assuming that cyclicality issues relating to changes in
MFP and capacity utilisation are any more serious in a five year periodisation than in
the peak to peak averages reported by the PC. The five year recalculated annual
averages are shown in Table 2.
8
Table 2. Five year average annual productivity growth rates market sector
1964-65 to 2003--04.
Period Number
of years
Inputs
ave annual
% growth
rate
MFP
ave
annual %
growth
rate
Inputs + MFP =
output
ave annual %
growth rate
MFP/Output
growth rate,
per cent
1964-65 to 1968-69 5 3.8 1.3 5.2 25.7
1968-69 to 1973-74 5 2.9 1.6 4.6 35.3
1973-74 to 1978-79 5 0.2 1.6 1.8 88.5
1978-79 to 1983-84 5 1.3 0.2 1.5 10.5
1983-84 to 1988-89 5 3.5 1.1 4.6 24.5
1988-89 to 1993-94 5 1.1 0.7 1.8 40.6
1993-94 to 1998-99 5 2.6 2.0 4.6 43.0
1998-99 to 2003-04 5 2.2 1.0 3.2 30.8
Source: Derived from ABS 5204.0 spreadsheet
nb average excludes the starting year for each period where it is included in the previous period
As shown in Chart 3, the simple evening out of period lengths confirms the general
robustness of the overall growth rates figures to some change in period length used for
averaging. The key difference between the PC 1999 period growth rates averages and
the five year growth rates averages is the sensitivity of the MFP growth rates averages
to period chosen. The PC periodisation of Chart 2 gives the impression of a fairly
stable MFP growth rates average over all periods with a contrasting jump in the
period 1993-94 to 1998-99, before falling back in the following period. The five year
periodisation reveals a more volatile MFP growth rate, in particular the impact of the
recession of the 1970s where a plunge in input growth rate is then followed by a
plunge in MFP growth rate, followed by recovery in the mid 1980s. It indicates the
volatility to which MFP growth is subject and the late 1990s figure does not stand out
so much.
9
Chart 3 Average annual growth rates of inputs, MFP and output, market sector,
1964-65 to 2003-04, five year period, per cent.
0.0
1.0
2.0
3.0
4.0
5.0
6.0
1964-65 to
1968-6
9
1968-69 to
1973-7
4
1973-74 to
1978-7
9
1978-79 to
1983-8
4
1983-84 to
1988-8
9
1988-89 to
1993-9
4
1993-94 to
1998-9
9
1998-99 to
2003-0
4
Market inputs growth Market MFP growth Market inputs+MFP = output
Source: Derived from ABS 5204.0 spreadsheet
nb average excludes the starting year for each period where it is included in the previous period
The impression of somewhat different pattern of contribution of MFP growth to
output growth in the different periodisation is reinforced in Chart 4 and Chart 5.
However the cyclicality is evident in both, subject to noise.
Notably input growth rates also track output growth rates closely. The impression
from period to period is of MFP as an apparently relatively stable cyclical residual
from output growth after input growth which is closely correlated with output growth
is taken out. Even on the PC 1999 figures for the last period it is too soon to judge
these as a significant departure from earlier periods.
10
Chart 4 MFP growth rate share of total output growth rate, annual average
market sector 1964-54 to 2003--04, peak to peak periods, per cent.
0.0
15.0
30.0
45.0
60.0
75.0
90.0
1964-65 to
1968-6
9
1968-69 to
1973-7
4
1973-74 to
1981-8
2
1981-82 to
1984-8
5
1984-85 to
1988-8
9
1988-89 to
1993-9
4
1993-94 to
1998-9
9
1998-99 to
2003-0
4
avera
ge a
nn
ual
per
cen
t
Market MFP/ output growth
Source: PC 1999 T3.1, p24, ABS 5204.0
nb average excludes the starting year for each period where it is included in the previous period
Chart 5 MFP growth rate share of total output growth rate, annual average
market sector 1964-54 to 2003-04, five year periods, per cent
0.0
15.0
30.0
45.0
60.0
75.0
90.0
1964-65 to
1968-6
9
1968-69 to
1973-7
4
1973-74 to
1978-7
9
1978-79 to
1983-8
4
1983-84 to
1988-8
9
1988-89 to
1993-9
4
1993-94 to
1998-9
9
1998-99 to
2003-0
4
Market MFP/ output growth
Source: Derived from ABS 5204.0 spreadsheet
nb average excludes the starting year for each period where it is included in the previous period
As previously indicated, the overall the biggest difference between the PC period and
5 year average growth rates is in the treatment of the decade or so from 1973-74 to the
11
mid 1980s. The figures are sensitive to the data split of 1978-79, so that the low
growth rate of the mid 1970s is more apparent in the five year period averages than it
is in the peak to peak periodisation.
This is borne out by Chart 6, Chart 7 and Chart 8 which show annual average growth
rates in inputs, MFP and output respectively for the period 1964-65 to 2003-04. Each
chart compares three measures for the series. These are the PC peak to peak period
average growth rates, five year average growth rates, and the actual annual growth
rates data points from ABS Cat 5204.0. It is worth noting in Chart 6 that the input
average growth rates for peak to peak and five year averages coincide after 1985-86.
In Charts 7 and 8 the MFP and output average growth rates respectively for peak to
peak and five year averages coincide after 1989-90. This hints at MFP and output
growth as led by input growth.
On the basis of the overall picture from these data it is a leap to connect a ‘surge’ in
the four year period up to 1997-98 with microeconomic reform, and the PC 1999
rightly urged caution. The de-emphasization of this format of presentation since then
would confirm that the surge may be a temporary state and that microeconomic
reform is hard to separate out from the many factors at work in the data.
Insofar as a surge in productivity can be accepted, an alternative explanation may be
found in the rapid increase in the IT share of the economy in that last period among
other things. This is supported by the reversal in the decline in capital productivity
found for that last period.
Chart 6 Average annual growth rate in inputs, market sector, and ‘peak to
peak’ and five year period averages 1964-65 to 2003-04, per cent
-8
-6
-4
-2
0
2
4
6
8
10
12
1964-6
5
1965-6
6
1966-6
7
1967-6
8
1968-6
9
1969-7
0
1970-7
1
1971-7
2
1972-7
3
1973-7
4
1974-7
5
1975-7
6
1976-7
7
1977-7
8
1978-7
9
1979-8
0
1980-8
1
1981-8
2
1982-8
3
1983-8
4
1984-8
5
1985-8
6
1986-8
7
1987-8
8
1988-8
9
1989-9
0
1990-9
1
1991-9
2
1992-9
3
1993-9
4
1994-9
5
1995-9
6
1996-9
7
1997-9
8
1998-9
9
1999-0
0
2000-0
1
2001-0
2
2002-0
3
2003-0
4
An
nu
al avera
ge p
er
cen
t
Inputs, % growth, PC market 5yr inputs market Ann growth in inputs market
Source: Derived from ABS 5204.0 spreadsheet and PC 1999 F3.1 p24
12
Chart 7 Average annual growth rates in MFP, market sector, and ‘peak to peak’
and five year period averages 1964-65 to 2003-04, per cent
-8
-6
-4
-2
0
2
4
6
8
10
12
1964-6
5
1965-6
6
1966-6
7
1967-6
8
1968-6
9
1969-7
0
1970-7
1
1971-7
2
1972-7
3
1973-7
4
1974-7
5
1975-7
6
1976-7
7
1977-7
8
1978-7
9
1979-8
0
1980-8
1
1981-8
2
1982-8
3
1983-8
4
1984-8
5
1985-8
6
1986-8
7
1987-8
8
1988-8
9
1989-9
0
1990-9
1
1991-9
2
1992-9
3
1993-9
4
1994-9
5
1995-9
6
1996-9
7
1997-9
8
1998-9
9
1999-0
0
2000-0
1
2001-0
2
2002-0
3
2003-0
4
an
nu
al avera
ge p
er
cen
t
MFP growth, PC market 5yr mfp market Ann growth in MFP market
Source: Derived from ABS 5204.0 spreadsheet and PC 1999 F3.1 p24
Chart 8 Average annual growth rates in output, market sector, and ‘peak to
peak’ and five year period averages 1964-65 to 2003-04, per cent
-8
-6
-4
-2
0
2
4
6
8
10
12
1964-6
5
1965-6
6
1966-6
7
1967-6
8
1968-6
9
1969-7
0
1970-7
1
1971-7
2
1972-7
3
1973-7
4
1974-7
5
1975-7
6
1976-7
7
1977-7
8
1978-7
9
1979-8
0
1980-8
1
1981-8
2
1982-8
3
1983-8
4
1984-8
5
1985-8
6
1986-8
7
1987-8
8
1988-8
9
1989-9
0
1990-9
1
1991-9
2
1992-9
3
1993-9
4
1994-9
5
1995-9
6
1996-9
7
1997-9
8
1998-9
9
1999-0
0
2000-0
1
2001-0
2
2002-0
3
2003-0
4
an
nu
al avera
ge p
er
cen
t
output growth, PC market 5yr output market Ann output growth market
Source: Derived from ABS 5204.0 spreadsheet and PC 1999 F3.1 p24
IV The measure of productivity: MFP market and whole economy
Attention is now turned to the issue of the measure of ‘multifactor productivity’ used
by PC/ABS. The measure is the ratio of ‘market’ output growth rate to the growth
rate in a combination of labour and capital input. The ABS estimates make use of
neoclassical assumptions in which the estimates of input growth on a translog
13
production function with zero economies of scale, with the marginal products of
capital and labour reflecting their market prices (ABS 1999 p14, ABS 2000 p369).
That is, the inputs growth rates measure is the geometric average of the increase in
capital services and hours worked each year, weighted by the changes in the shares
paid to capital and to labour out of income respectively from one year to the next:
It/ It-1 = (Kt / Kt-1)wkt (Lt / Lt-1)
wlt
where It is the combined inputs index in year t, Kt is the index of real capital input in
year t, and Lt is the index of real labour input in year t. Here wkt and wlt are the
respective average cost shares of capital and labour in years t and t-1. These costs
shares are an average measure of the output elasticity with respect to each factor
assuming constant returns to scale and marginal products of capital and labour equal
to their respective market prices.
This is a Tornqvist Divisia index which conforms to the translog specification. It
captures variation in the elasticity of substitution between the two inputs each year as
the input proportions and marginal products change, assuming constant returns to the
inputs.
The data are based on new estimates for ABS Cat 5204.0 from 1997 including new
chain indices developed for measuring output and capital input (ABS 1999 p14).
Changes to capital stock measurements were intended to take account of IT stock, and
this merits consideration elsewhere. According to ABS the revisions resulted in
lowered estimates of the contribution of capital services, and the downward revisions
of estimates of capital productivity growth rates caused MFP to be revised downward
from earlier estimates (ABS 1999 p17).
(i) Market sector
Another issue is the partial nature of the measure for the market sector. ‘The ‘market
sector’ is a special industry grouping comprising the following industries:
Agriculture, forestry and fishing; Mining; Manufacturing; Electricity, gas and water;
Construction and wholesale trade; Retail Trade; Accommodation, cafes and
restaurants; Transport and storage; Communication services; Finance and insurance;
and Cultural and recreational services.’ The ABS indicates that this ‘industry
grouping relates broadly to marketed activities for which there are satisfactory
estimates of the growth in the volume of output. .. ‘Whereas the non-market sector
comprises Property and business services; Government administration and defence;
Education; Health and community services; Personal and other services; and
Ownership of dwellings’ (ABS 2000 p363). The ABS indicates that MFP measures
are not presented for these industries because the volume estimates of value added are
derived using input data as measures of output which effectively assumes no change
in productivity. The ABS recognises that the measures are imperfect owing to the
inclusion of output measured by inputs eg in administration services in the market
sector and of output which is properly measured in the non market sector.
However the view taken in this paper is that the exclusion of industries identified as
part of the non-market sector warrants examination. The exclusion is problematic at
the aggregate level. The approach cannot take account of the extent to which the
sectors are integrated in their impact on performance at the national level. The effect
14
of interaction and spillovers between industries in the non-market and market sectors
calls for investigation. Moreover microeconomic reform measures figure large in
these interactions. Microeconomic reform has been expected to improve performance
in both sectors.
Accordingly for the purpose of this paper whole economy measures of combined
inputs growth, output growth and MFP are obtained in from the same data sources as
the measures above and compared with those for the market sector, see Appendix
table. An impression of the size of the market sector relative to GDP can be gained
from Chart 9 which presents chain index series for GDP (ABS spreadsheet 506030)
and the market sector output gross value added (from the ABS Cat 5204.0 spreadsheet
Indexes of productivity and related measures as above). The benchmark for market
output is obtained by assuming that market output is 62 per cent of GDP in 2002-03
as quoted by ABS and PC. The market output figures for earlier years are obtained by
weighting that figure by the market output index figure for that year. These estimates
must be treated with caution in that chain indexes are not compiled on an additive
basis.
Chart 9 GDP chain index and output market sector 1964-64 to 2003-04, chain
2002-03
0.0
100000.0
200000.0
300000.0
400000.0
500000.0
600000.0
700000.0
800000.0
900000.0
1964
-65
1965
-66
1966
-67
1967
-68
1968
-69
1969
-70
1970
-71
1971
-72
1972
-73
1973
-74
1974
-75
1975
-76
1976
-77
1977
-78
1978
-79
1979
-80
1980
-81
1981
-82
1982
-83
1983
-84
1984
-85
1985
-86
1986
-87
1987
-88
1988
-89
1989
-90
1990
-91
1991
-92
1992
-93
1993
-94
1994
-95
1995
-96
1996
-97
1997
-98
1998
-99
1999
-00
2000
-01
2001
-02
2002
-03
2003
-04
ch
ain
$A
20
02-0
3=
100
GDP 5206030 chain 2002-03 A$m market output calc from total GDP
Sources: derived from ABS spreadsheet 506030 Cat 5204.0 spreadsheet Indexes of
productivity and related measures.
(ii) Total input and MFP series for the whole economy
The methodology for obtaining the market sector combined input series was applied
to obtain total input series for the whole economy. This involved making use of chain
index based aggregate capital and labour series for the whole economy. Income shares
of capital and labour were obtained from ABS, as provided by employee
compensation for labour, and gross operating surplus (GOS) and gross mixed income
for the self employed (GMI) (noting very small labour component) taken as the share
of capital. A combined input index was obtained for the whole economy in the
manner described above for the market input series (Capital series from ABS
15
spreadsheet 5204069, labour from ABS spreadsheet 6202003,and payments shares for
labour (compensation of employees) and capital (GOS+GMI) derived from ABS
spreadsheets 5204057 and 5204026). Average annual MFP growth was obtained for
the whole economy as the difference between average annual GDP growth and total
input growth. The data are set out in APPENDIX 1
Table 1 and Table 2. Chart 10 presents these data for the whole economy and may be
compared with Chart 1 for the market sector. Of greatest note is the relatively slow
growth in whole economy MFP, with most growth in the whole economy apparently
emanating from the growth in inputs.
Chart 10 Annual average output, total inputs and MFP, whole economy, 1964-
65 to 2003-04, index 2002-03=100
0
20
40
60
80
100
120
1958
-59
1960
-61
1962
-63
1964
-65
1966
-67
1968
-69
1970
-71
1972
-73
1974
-75
1976
-77
1978
-79
1980
-81
1982
-83
1984
-85
1986
-87
1988
-89
1990
-91
1992
-93
1994
-95
1996
-97
1998
-99
2000
-01
2002
-03
2002-0
3=
100
total inputs index total MFP index GDP index
Chart 11 sets out the data from Chart 1 and Chart 10 after rebasing at 1964-65=100
for purposes of clarity.
16
Chart 11 GDP, total inputs and MFP indexes for the whole economy and for the
market sector, 1964-65 to 2002-03, 1964-65=100.
0
50
100
150
200
250
300
350
400
1958
-59
1960
-61
1962
-63
1964
-65
1966
-67
1968
-69
1970
-71
1972
-73
1974
-75
1976
-77
1978
-79
1980
-81
1982
-83
1984
-85
1986
-87
1988
-89
1990
-91
1992
-93
1994
-95
1996
-97
1998
-99
2000
-01
2002
-03
1964-6
5=
100
total inputs index total MFP index GDP index Market MFP Market output Market inputs
Source: derived from ABS spreadsheet data from Cat 5204 and 6202, rebased at 1964-65=100.
The first two series from the bottom up in Chart 11 are indexes for total economy
MFP and market MFP respectively. The estimates for total MFP do not increase as
rapidly overall as those for market sector MFP and are less volatile. Total MFP does
not grow as fast as market sector MFP in the 1990s and appears to flatten after that.
That is the extent of growth in market sector MFP is not reflected in whole economy
MFP which appears to have grown much more steadily and slowly overall at around
half the rate of market sector growth. The middle two series in Chart 11 show total
economy inputs as growing more rapidly and smoothly than market sector inputs and
both appear to increase at similar rates in the 1990s. The impression is that the
cyclical movements in labour inputs which are around half the combined inputs
measure are more manifest in the market inputs measure than in that for the whole
economy. The peak to peak variation is even less evident for the whole economy than
for the market sector.
The annual growth rates data based on the indexes for the whole economy are
averaged according to the periodisation for the peak to peak average growth rates for
the market sector in Table 1 and the five year average growth rates in Table 2,
presented in Table 3 and Table 4 respectively.
17
Table 3 Whole economy peak to peak average annual productivity growth rates,
per cent
Period Number
of years
Inputs,
ave annual
% growth
rate
MFP
ave annual
% growth
rate
Inputs + MFP
= output
ave annual %
growth rate
MFP/Output
growth rates,
per cent
1964-65 to 1968-69 5 4.3 1.1 5.4 26.23
1968-69 to 1973-74 5 3.8 0.6 4.5 16.48
1973-74 to 1981-82 8 2.3 0.4 2.8 17.68
1981-82 to 1984-85 3 2.1 0.5 2.6 23.31
1984-85 to 1988-89 4 3.7 0.3 4.0 8.23
1988-89 to 1993-94 5 1.7 0.6 2.3 33.37
1993-94 to 1998-99 5 2.5 1.9 4.4 75.24
1998-99 to 2002-03 4 2.6 0.6 3.2 24.80
Source: derived from ABS spreadsheet data from Cat 5204 and 6202
nb average excludes the starting year for each period where it is included in the previous period
Chart 12 and Chart 13 present the whole economy data in the same manner as Chart 2
and Chart 3 for market sector data. Again the main difference between the ‘peak to
peak’ and five year average periodisations is in the distribution of contributions to
growth for the period from 1973-74 through to the mid 1980s. The volatility in MFP
is more pronounced and the MFP growth for the 1993-94 to 1998-99 period stands out
as exceptionally high before it falls back to a level representative of the whole period
in 1998-99 to 2002-03. This suggests the high value for the 1993-94 to 1998-99
period may be a one off. While there may have been aspects of microeconomic
reform implementation which contributed to the high level for that period, it does not
show portent for an ongoing improvement in productivity which was anticipated to
result from microeconomic reform. Nor is there any reason to take the view that the
MFP growth is not sustained due to microeconomic reform not having gone far
enough. Clearly there are other factors at work for the period 1993-94 to 1998-99 and
these warrant investigation, particularly the role of the expansion in ICT capital and
activity in that period. Gruenwald et al (2001) found that the accumulation of ICT
capital was important in explaining the ‘impressive, structural acceleration of labor
productivity after 1995. They found that two thirds of the capital deepening which
explained half of labour productivity growth in the late 1990s would be due to ICT
capital, above the Euro average (Gruenwald et al 2001).
18
Chart 12 Average annual growth rates of inputs, MFP and GDP, 1964-65 to
2002-03 ‘peak to peak’ period, per cent
Source: derived from ABS spreadsheet data from Cat 5204 and 6202
nb average excludes the starting year for each period where it is included in the previous period
Table 4 Five year average annual productivity growth rates whole economy, per
cent
Period Number
of years
Inputs
ave annual
% growth
rate
MFP
ave annual
% growth
rate
Inputs + MFP
= output
ave annual %
growth rate
MFP/Output
growth rates,
per cent
1964-65 to 1968-69 5 4.3 1.1 5.4 26.23
1968-69 to 1973-74 5 3.8 0.6 4.5 16.48
1973-74 to 1978-79 5 1.9 0.6 2.5 30.23
1978-79 to 1983-84 5 2.4 0.0 2.4 1.19
1983-84 to 1988-89 5 3.7 0.6 4.3 16.07
1988-89 to 1993-94 5 1.7 0.6 2.3 33.37
1993-94 to 1998-99 5 2.5 1.9 4.4 75.24
1998-99 to 2002-03 4 2.6 0.6 3.2 24.80
Source: derived from ABS spreadsheet data from Cat 5204 and 6202
nb average excludes the starting year for each period where it is included in the previous period
19
Chart 13 Average annual growth rates of inputs, MFP and GDP whole
economy, 1964-65 to 2002-03, five year period, per cent.
Source: derived from ABS spreadsheet data from Cat 5204 and 6202
nb average excludes the starting year for each period where it is included in the previous period
The key aspects to be considered in these data are the influence of cyclicality and
stochastic aspects. Preliminary investigation by regression is reported in the next
section.
V Estimation of MFP for market sector and whole economy
For this purpose some simple regression estimates are obtained, based on the relation
between the growth in combined inputs and output for the market sector and for the
whole economy from the data above. The form is the growth accounting relation
implied between inputs and output from the above analysis, with the relation between
labour and capital inputs specified at the outset by a nonstochastic translog algorithm
as described above.
The equation for estimation is
qi = β 0i + β 1i xi + ui (1)
where
qi is annual growth in the output index where i = 1 for market sector and i=2 for the
whole economy, and
xi is annual growth in the combined input index where i = 1 for market sector and i=2
for the whole economy.
The growth rates series for market output, market inputs, GDP and whole economy
inputs are stationary according to ADF test results, although the efficiency of the tests
remains limited for this sample size of less than 40 observations.
20
The results of OLS estimation of equation (1) are presented in Table 5.
Table 5 Results from equation (1) by OLS Equation
(1)
β 0i
estimate
t stat β 1i
estimate
t stat HA:v
β 1i ≠ 1
t stat:*
critical t,
2 tailed
5% level,
n=38
R2
Durbin
Watson
Market
0.90 1.51 1.13 5.12 0.60 2.04 0.422 2.32
Total
economy
0.48 0.76 1.09 5.23 0.42 2.04 0.432 1.92
* t statistic is (β 1i – 1)/SE β 1i.
The equations were estimated for the available common sample of 1965-66 to
2002-03. The Durbin Watson test results (n=39, k=2, DL=1.38, DU=1.60) indicate that
the null of no autocorrelation is not rejected for both equations i.e. the residual of year
t is not correlated with the residual from year t-1. However the significance of the
constant term in the market equation only at the 10 per cent level (of t=1.51) and the
statistical insignificance of the constant term for the whole economy equation point to
misspecification of both. ADF tests on the residuals of both equations indicate
relationships which are cointegrating. (Test results available on request.)
The market specification appears to suggest that a one percent growth in market
inputs adds 1.13 per cent to market output, while the total economy specification
indicates a slightly smaller impact of 1.09 per cent. That is the increment to growth
over and above constant returns to inputs is around 13 per cent trend unattributed
productivity in the market specification and about 9 per cent in the whole economy
equation. This is not borne out by testing H0 that β 1i = 1 with HA that β 1i ≠ 1. The t
statistic is (β 1i – 1)/SE β 1i. H0 was not rejected according to the results in the sixth
and seventh columns of Table 5 equation (1) for both the market sector and whole
economy respectively. This specification appears not to inform about the role or
drivers of productivity and indicates if anything that the growth in output advances
proportionately to the growth in inputs.
Both the coefficient on inputs and the stochastic component may be functions of
cyclical factors of which these specifications fail to take account. Some of these are
buried in the total inputs measure as the relation between capital and labour changes
with cyclical capacity utilization. This is supported by the constant term and the
slightly larger magnitude for the inputs coefficient in the market equation where
cyclical impacts may be more manifest. Brooks et al (2000) also indicate the
importance of cyclical factors in estimating productivity in the market sector.
Chart 14 and Chart 15 present the PC/ABS MFP series and the residuals from
equation (1) above for the market sector and the whole economy respectively. The
vertical difference between the two series in each chart corresponds to the value of the
constant term and suggests a source of greater than constant returns due to other
factors. The overall variation reflects unaccounted for cyclicality. The upward blip of
the 1990s is shown, in particular the unusual climb of the series’ in the whole
economy chart. Chart 14 and Chart 15 cannot reveal any relative divergence between
output and combined inputs in that period.
21
Chart 14 Annual average MFP growth, point estimates and equation (1)
residuals for market sector 1965-66 to 2002-03
-6.00
-4.00
-2.00
0.00
2.00
4.00
6.00
8.001966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Per
cen
t
Market equn residuals Market MFP
Source: data as above, and retrieved residuals from equn 1a above.
Chart 15 Annual average MFP growth, point estimates and equation 1b
residuals for whole economy 1965-66 to 2002-03
-6.00
-4.00
-2.00
0.00
2.00
4.00
6.00
8.00
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Per
cen
t
Total economy equn residuals Total MFP
Source: data as above, and retrieved residuals from equn 1b above.
A simple ECM was also estimated as an approach taken to address the issues shown
in the linear estimation. This is
22
qi = β 0 i + β 1 i x i + β 2 i Q i t-1 + β 3 i X i t-1 + u i (2)
where notation is as for equation (1), and also
Q i t-1 is the level of output index where i = 1 for market sector and i=2 for the
whole economy (nb this is the levels variable corresponding to output growth rate q,
lagged by one year)
X i t-1 is the level of the combined input index where i = 1 for market sector
and i=2 for the whole economy (nb this is the levels variable corresponding to inputs
growth rate q, lagged by one year)
The results of OLS estimation are presented in Table 6.
Table 6 Results from equation (2) by OLS Equation
(2)
β 0i
estimate
t stat β 1i
estimate
t stat β 2 i
estima
te
t
stat
β 3i
estimate
t
stat
R2
Durbin
Watson
Market
-17.42 2.34 1.29 5.86 0.71 2.51 -0.54 2.51 0.51 2.09
Total
economy
-1.72 0.80 1.34 5.43 -0.05 0.53 0.075 0.62 0.48 1.99
Again for both market and total economy estimates for equation (2) indicated
relations which were cointegrating according to ADF tests of the residuals. Perusal of
the coefficients indicated the growth rates linear form might be the more correct one
for the whole economy, as the statistical insignificance and small magnitude of the
last two terms in equation (2) for the whole economy did not suggest a process of
dynamic adjustment from year to year toward a long run equilibrium for the economy.
However the results for the market equation insofar as they can be accepted point to a
potential adjustment process. This process could somehow be mediated through the
rest of the economy.
Clearly the estimations indicate that a fuller investigation is warranted of whole
economy impacts. That would include a separation of capital and labour inputs and a
more careful modelling of technological change particularly with respect to ICT.
Proper investigation of cyclicality for the whole economy is called for as well as has
been done earlier for the market sector (Brooks et al 2000). Systematic hypothesis
testing for robustness of form including structural break to model recent impacts is
required.
VI Conclusion
The increase in productivity growth in the 1990s as measured has been taken as an
indication of the success of microeconomic reform policy in providing for sustained
productivity increases, at least prior to a subsequent downturn. The impact of
microeconomic reform on the Australian economy as indicated by aggregate
productivity growth estimates was investigated in this paper.
Ex post observation based aggregate evaluations are scarce and have been largely
focussed on the Productivity Commission / Australian Bureau of Statistics estimates
of recent increasing productivity for the Australian economy. These estimates are
based on data since the mid 1960s, a period which excludes the earlier post War
23
growth spurt in the Australian economy. The PC/ABS estimates of ‘multifactor
productivity’ growth (MFP) for the ‘market’ sector making up around 62 per cent of
the economy were examined in detail. The MFP measure is based on a point estimate
average annual growth residual after a translog combined inputs measure for the
contribution of capital services and labour is accounted for. Period estimates based on
‘peak to peak’ measured productivity make the MFP increase in the 1990s appear
more stark relative to the apparent stability in other periods. Five year period
estimates highlight the variability in MFP over time, and the role of cyclical effects in
productivity. The peak to peak approach does not appear to resolve cyclical issues in
the productivity measures which affect findings for the impact of microeconomic
reform.
The market sector MFP measures are compared with those reconstructed in this paper
using data for the whole economy. It is clear that any estimates of productivity need
to take account of whole economy interactions. This is all the more the case given the
acknowledgement that cost based output measures are applied to some activities in all
sectors of the economy. Productivity cannot be assumed to be the exclusive province
of any one portion of the economy. An economy wide indicator seeks to capture
external impacts throughout the economy. It is these areas in which microeconomic
reform should have key effects.
The whole economy estimates support the spike in ‘multifactor’ productivity growth
shown in the market sector data in the 1990s. The few subsequent data support a
return to levels comparable with previous years. They do not at this time provide
evidence of a sustained increase with a microeconomic reform as a factor. Simple
regression estimates support the point findings. The attribution in other work of a one
off increase of 0.5 per cent in growth in the 1990s does not seem unreasonable.
However to attribute this to microeconomic reform is another matter. The extent to
which the 1990s measures reflect commercial valuation of previously non market
output needs further consideration. Sources are more likely to be found in the role of
the ICT sector, once cyclical factors are more closely attended to. Further attention to
international comparisons of performance related to reform is also called for.
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ABS 2000 Cat 5216.0 Australian System of National Accounts Concepts Sources and
Methods
ABS Cat 5204.0 spreadsheet Indexes of productivity and related measures 5204022,
spreadsheets 5204026, 506030, 5204057, 5204069 and 6202003
Brooks R, P Gruenwald, J Lee and R Salgado 2000 Australia; Selected issues and
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24
Cashin Paul and Sam Ouliaris 2004 Key features of Australian business cycles
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27
APPENDIX 1
Table 1: GDP chain, labour, capital, total inputs and MFP indexes 2002-03=100,
whole economy GDP chain
5206030
Total labour
6202003
Total capital
5204069
Total inputs Total
economy
MFP
1960-61 21.8 45.8 17.7 29.90 72.08
1961-62 22.1 45.9 18.7 30.74 71.05
1962-63 23.4 47.2 19.7 32.02 72.51
1963-64 25.1 48.5 20.9 33.33 74.75
1964-65 26.7 49.8 22.1 34.71 76.19
1965-66 27.3 51.4 23.3 36.28 74.51
1966-67 29.0 53.2 24.7 37.92 75.99
1967-68 30.5 54.6 26.1 39.45 76.76
1968-69 32.6 55.9 27.6 41.07 78.96
1969-70 35.0 57.9 29.2 42.90 81.12
1970-71 36.3 59.8 30.8 44.74 80.76
1971-72 37.8 60.6 32.4 46.11 81.47
1972-73 38.9 62.1 34.0 47.72 81.05
1973-74 40.6 64.0 35.6 49.55 81.46
1974-75 41.0 63.9 37.1 50.28 81.06
1975-76 42.1 64.7 38.5 51.45 81.46
1976-77 43.6 65.1 40.1 52.48 82.65
1977-78 44.0 65.3 41.7 53.43 81.96
1978-79 45.9 65.5 43.5 54.49 83.82
1979-80 47.4 67.0 45.3 56.20 83.90
1980-81 48.9 68.8 47.3 58.12 83.78
1981-82 50.4 69.6 49.5 59.65 84.17
1982-83 49.2 68.5 51.4 60.04 81.64
1983-84 51.6 69.0 53.3 61.26 83.87
1984-85 54.3 71.2 55.5 63.44 85.32
1985-86 56.7 74.1 57.7 66.05 85.47
1986-87 58.0 76.0 59.9 68.09 84.85
1987-88 61.1 78.1 62.3 70.36 86.58
1988-89 63.6 81.5 64.9 73.37 86.35
1989-90 65.9 84.6 67.5 76.21 86.24
1990-91 65.9 84.0 69.6 76.99 85.27
1991-92 66.0 82.5 71.4 77.20 85.26
1992-93 68.4 82.2 73.4 78.04 87.44
1993-94 71.1 83.8 75.4 79.86 88.81
1994-95 74.1 87.1 77.7 82.65 89.45
1995-96 77.2 89.6 80.0 85.05 90.60
1996-97 80.2 90.3 82.5 86.61 92.38
1997-98 83.8 91.4 85.2 88.50 94.52
1998-99 88.2 92.4 88.1 90.39 97.51
1999-00 91.5 94.8 91.2 93.13 98.26
2000-01 93.4 95.9 93.8 94.92 98.33
2001-02 97.0 97.8 96.6 97.24 99.77
2002-03 100.0 100.0 100.0 100.00 100.00
2003-04 103.6 na na na na
Source: ABS spreadsheets 5204069, 6202003, 5204057 and 5204026
28
Table 2 GDP chain, labour, capital, total inputs and MFP growth rates whole
economy GDP
growth per
cent
total labour
growth per
cent
total capital
growth per
cent
total inputs
growth per
cent
total economy
MFP growth
1960-61 2.66 2.93 5.93 4.38 -1.72
1961-62 1.37 0.36 5.43 2.81 -1.43
1962-63 6.22 2.88 5.50 4.17 2.06
1963-64 7.18 2.57 5.66 4.08 3.09
1964-65 6.06 2.71 5.74 4.14 1.92
1965-66 2.30 3.32 5.86 4.51 -2.21
1966-67 6.51 3.46 5.74 4.53 1.99
1967-68 5.06 2.53 5.76 4.04 1.02
1968-69 6.96 2.56 5.81 4.09 2.87
1969-70 7.19 3.41 5.70 4.46 2.73
1970-71 3.85 3.44 5.38 4.30 -0.44
1971-72 3.93 1.32 5.24 3.06 0.88
1972-73 2.98 2.37 4.89 3.49 -0.51
1973-74 4.33 3.11 4.88 3.84 0.50
1974-75 0.99 -0.11 4.01 1.48 -0.49
1975-76 2.82 1.23 4.01 2.33 0.49
1976-77 3.45 0.64 4.01 1.99 1.46
1977-78 0.98 0.25 4.03 1.81 -0.83
1978-79 4.27 0.27 4.27 2.00 2.27
1979-80 3.23 2.40 4.11 3.14 0.09
1980-81 3.26 2.59 4.53 3.41 -0.14
1981-82 3.10 1.20 4.70 2.63 0.47
1982-83 -2.35 -1.60 3.77 0.65 -3.01
1983-84 4.77 0.71 3.74 2.04 2.73
1984-85 5.29 3.20 4.02 3.56 1.73
1985-86 4.30 4.15 4.08 4.12 0.18
1986-87 2.35 2.48 3.81 3.08 -0.73
1987-88 5.36 2.82 3.90 3.33 2.03
1988-89 4.03 4.39 4.17 4.29 -0.26
1989-90 3.74 3.74 4.02 3.87 -0.12
1990-91 -0.11 -0.75 3.13 1.03 -1.13
1991-92 0.26 -1.77 2.62 0.26 -0.01
1992-93 3.65 -0.30 2.70 1.09 2.56
1993-94 3.90 1.97 2.75 2.33 1.57
1994-95 4.22 3.85 3.08 3.50 0.71
1995-96 4.18 2.85 2.95 2.89 1.29
1996-97 3.80 0.79 3.11 1.84 1.96
1997-98 4.50 1.23 3.32 2.18 2.32
1998-99 5.30 1.10 3.41 2.14 3.16
1999-00 3.80 2.62 3.53 3.03 0.77
2000-01 2.00 1.15 2.84 1.92 0.08
2001-02 3.90 1.95 3.00 2.44 1.46
2002-03 3.07 2.29 3.48 2.84 0.23
2003-04 3.63 na na na na
Source: ABS spreadsheets 5204069, 6202003, 5204057 and 5204026
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