Productivity will come down to technology and innovation in the long term

Productivity isn’t everything, but in the long run it’s nearly everything

Nobel Prize-winning economist Paul Krugman.

John Edwards, the Reserve Bank of Australia board member said in a paper published by the RBA, that economic reforms would enhance productivity and stressed that in the long run, productivity will come down to technology and innovation, to improvements in human capital and to our capacity to invent, or adopt and adapt productivity-enhancing innovations. Source: AFR 6-1-2012 “Productivity not so bad”.

In my humble view I believe he is right to a large extent, although I believe that also more should be done in terms of labour productivity and flexibility.

Some clear examples of adopting technologies are the use of mobile smart phones, broad access to internet and the capacity to get and implement IT systems rapidly.

Another example is in transportation technology. However, it is embarrassing to see our train and bus system for instance in NSW. It takes more than 30 minutes to commute by train from Chatswood to Town Hall station, at a cost of some $7 or $8 return ticket. In other countries (say France, Germany, etc), it takes some 5 minutes to achieve the same distance, with very frequent trains (metro) and at a $1.5 !

It is embarrassing, it is disappointing and it is frustrating. We are some 30 years behind them. We are a rich country and we deserve better.

The impact of such a poor transport system on productivity is huge. It basically make us very unproductive!.

Having baggage handlers at our airports not working when there is a small storm or rain (even though planes are landing) making mums with babies wait for hours at the terminals to get their bags is frustrating, inefficient and unproductive. It is what makes us unproductive.

Having inefficient and polluting buses on our streets make us environmentally dirty and unproductive. Advanced European countries are already running on electric and at worse hybrid buses (and wow they are quiet!).

Our roads are shock blocked with traffic. That makes us unproductive. Our roads are full of signs (drivers spend more time reading signs than driving). They are also full of tolls and cameras.

There is no point in being a great adopter and user of Information Technology and computer systems when our basic infrastructure and transportation systems are an embarrassment. They are no better than any 3rd word country – and a huge reason for our lack of productivity.

Wake up NSW! Wake up Australia!

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About The Author

Marco Tapia

Managing Director, PicNet Pty Ltd. Marco has 30 years experience as Company Director, CIO, Business Technology Consultant and IT Project Manager, managing large and medium size IT functions for national and international corporations. He holds an MBA from the University of NSW, a BSc (Electronics), a Diploma in Systems Analysis and is a member of the Australian Institute of Company Directors.

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