So what were the costs of this slowdown in productivity? Wood described an economy that was “older, bigger and slower,” but she could also have added “dumber”; his statistic that the average grade nine student’s average academic achievement in 2018 was a full year behind the same student in 2003 isn’t exactly new, but it is certainly striking.
Basically, Wood didn’t just define the problem, but instead moved quickly to the three areas she argues the solutions should focus on.
We cannot continue to ask women to monitor the economy.
— Helen Dalley-Fisher, Equality Rights Alliance
Let’s start with his third point on the agenda: economic dynamism. The idea that competition policy would be brought up an hour after the jobs peak was certainly a surprise, but Wood argued that the composition of Australian industry – where the 20% most profitable companies in Australia in 2015 were unchanged from a decade earlier – holding back productivity growth.
While less competition makes individual businesses more profitable, it means there is less innovation in the economy, less job switching, and less pressure on underperforming businesses that can get by offering inferior products and services because they can pay lower wages.
The first and second items on Wood’s agenda were related: improving education standards and increasing labor force participation, especially among women and minority groups.
On education, Wood says there is growing evidence of how education needs to be improved, but Australia is struggling to embed this at classroom level; there is still work to be done to attract and retain the best performing teachers and strengthen the links between education and industry.
On women’s participation, Wood said Australia ranks 38th in the world for women’s economic opportunities, despite having some of the best education levels for women in the world.
As RMIT’s Dr Leonora Risse told the summit shortly after Wood’s speech, research suggests that 125,000 women may work but cannot due to lack of childcare and unpaid care commitments. remunerated. This led Wood to utter what could become one of the summit’s dividing lines.
“I can’t help but think that if women’s untapped participation in the workforce was a huge deposit of iron ore, we’d have governments falling over themselves to hand out subsidies to get it out of the ground. “
Although it is unrealistic to expect this summit to produce quick fixes, the discussion on equal opportunity and pay for women that followed Wood’s speech suggested that increasing women’s participation through improving child care and early education can help overcome some of the barriers to productivity identified by Wood.
Clearly, better childcare and early education will help bring more women back into the workforce; some 44,000 women could immediately work full-time, according to The Parenthood’s executive director, Georgie Dent. Or as Helen Dalley-Fisher of the Equality Rights Alliance put it bluntly: “We can’t keep asking women to watch over the economy.
But better childcare and early education would also help improve general standards of education; Sam Mostyn, head of Chief Executive Women, said one in five children arrives at school with at least one cognitive disability.
Childcare and early education therefore deliver a triple whammy: increased labor supply, increased female participation, and improved educational outcomes.
But the challenge to boosting those jobs is, ironically, jobs: increasing the supply of childcare requires increasing the supply of childcare workers, a group that, as Dent pointed out, suffers from low wages and high turnover.
The problem of how to increase the supply of childcare without making it unaffordable has always been, and will continue to be, a problem.
But to use Wood’s iron ore analogy, perhaps we need to think differently. Miners have an incentive to extract iron ore – and governments have an incentive to support them – when the benefits outweigh the costs.
The costs of increasing the supply of childcare services are clearly considerable. But given the potential for three layers of advantage, perhaps this is the smart bet we need to make to shape the country.