Get ready for the usual demands from some major business organisations for purported “fixes” for Australia’s low productivity growth ahead of the government’s August Productivity Summit.

A cut in the company tax rate and demands for industrial relations reform are little more than special pleading. Business can and must do better, and there are fruitful policy options they can advocate.

But first, is Australia’s productivity performance truly so woeful?

As our population ages and we demand and get improved medical services, the so-called non-market services sector is the fastest-growing component of our economy.

These are activities such as health and education, policing and defence.

Labour productivity is simply GDP per hour worked. But what is the GDP of a doctor, a nurse or an aged-care worker?

Would we truly be better off if each worker in an aged-care facility looked after 40 residents instead of 20? And would we benefit from school class sizes being doubled from 25 to 50 students?

Since statisticians haven’t worked out how to quantify the GDP produced by workers in the non-market services sector of the economy, the assumed productivity of those workers is zero – zilch.

So, for........

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