The think tank for the world's rich countries had some bad news for Australia last week. The OECD found that Australia's productivity growth wasn't just slow in 2024, it went backwards by 0.7 per cent.

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Such dismal productivity results are a bad sign of what's to come to our long-run living standards. So, who's to blame?

The narrative in Australia goes something like this. The Hawke-Keating era delivered major reforms that delivered big increases in productivity.

We rode the wave for a few decades, but the lack of reform from successive governments has meant that productivity growth has now flatlined.

In short, successive governments are to blame for Australia's weak productivity growth because they didn't keep up the pace of reform momentum.

It's a neat narrative, but it's also somewhere between misleading and wrong. Sure, the government could have done more to lift productivity growth. But blaming them for the decline in the first place is not accurate.

There are four things we observe in the data which suggest that it's probably not fair to place all the blame on the government.

First, the narrative above assumes that the decline in productivity growth is purely an Australian phenomenon. It's not.

Almost all developed countries around the world have experienced declines in productivity growth to varying degrees over the last few decades, including governments that have been relatively ambitious in their reform programs.

This tells us that while some of the decline in productivity growth might be homegrown, a chunk of it probably relates to a slowing in the overall global frontier of how much productivity growth rich countries can generate.

How big is this chunk? Some educated guesses suggest it's probably around........

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