Productivity boost need to sustain Australian growth

Australia risks a long period of little or no economic growth if it fails to boost productivity.

According to a new report for management consultancy the McKinsey Global Institute (MGI), even best-case scenario projections put Australian growth at 3.7 per cent – far below the levels achieved prior to the global financial crisis.

A slump in economic output could have a major impact on Aussies' savings accounts, particularly if job losses are incurred.

Chris Bradley, author of MGI's latest report, said: "If we don't fix productivity and the terms of trade settles back to its long run level, we could have almost no income growth in the next seven years."

He claimed that boom-years growth was more down to luck that to good financial management – a none-too reassuring statement.

Mr Bradley believes the key to improved productivity is to increase the skill-set of the Australian workforce to meet industry demands.

Federal treasurer Wayne Swan is already investigating how to fund a business tax rate cut, which he believes could bolster growth.

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