Senator the Hon Helen Coonan was Minister for Communications, Information Technology and the Arts from 18 July 2004 to 3 December 2007. This site is available for archival purposes only.

Senator Stephen Conroy is the current Minister for the Department of Broadband, Communications and the Digital Economy

017/06
22 March 2006

ICT is driving productivity growth in Australia

The Minister for Communications, Information Technology and the Arts, Senator Helen Coonan, today released an economic paper which shows ICT will be the main technological driver of productivity growth over the next 20 years.

In a speech to the Communications Day Summit today the Minister released a report - Forecasting productivity growth: 2004 to 2024 - which forecasts that technology and continued technological advancements will fuel economic growth in Australia over the next few decades.

“This report forecasts that Australia will continue to benefit from the strong technological momentum in ICT and its many applications,” Senator Coonan said.

Labour productivity growth will be particularly strong in sectors that are or are becoming heavy users of ICT technologies, like telecommunications, manufacturing, finance and trade.

“Advances in ICT technologies in the next 20 years will mostly be in ‘ubiquitous' computing and communications, the ones pervading economic life,” Senator Coonan said.

“Computerised controllers will be used more in manufacturing, mining, construction, agricultural and transport equipment, to increase machine ‘intelligence' and reduce labour requirements.

“Biotechnology and nanotechnology will also make a significant contribution to productivity growth.

“With Australia facing emerging economic challenges, the continuing rapid advances in ICT and its many applications will help to sustain and improve living standards and continue to make a valuable economic contribution.”

The report builds on findings from previous Government reports on productivity growth in manufacturing and service industries since the mid 1980s.

You can find the report at http://www.dcita.gov.au/ie/productivity_drivers/macro_studies.

Forecasting productivity growth: 2004 to 2024

Forecasting productivity growth: 2004 to 2024 forecasts productivity growth in major sectors of the Australian economy between 2004 and 2024. Aimed at economic policy makers and the interested public, the report suggests that ICT will remain the main technological driver of productivity growth in Australia over the next 20 years.

The report presents some major conclusions.

There is 80 per cent probability that GDP per capita will grow at an average rate of between 1.26 and 1.83 per cent per annum between 2004 and 2024. The mean prediction is 1.57 per cent. This is close to the corresponding predictions presented in Treasury (2002) and Productivity Commission (2005).
Labour productivity growth will be particularly strong in sectors that are heavy users of ICT technologies. By contrast, productivity growth in sectors that are less heavily exposed to ICT technologies, such as accommodation and restaurants as well as personal, cultural and recreational services is expected to be relatively low.
The main advances in ICT technologies in the next 20 years will be in ubiquitous computing and communications pervading all facets of economic life.
The report suggests that the main sources of productivity growth will be capital deepening (that is, more capital per worker) combined with technological progress in ICT and to a lesser extent in biotechnology, nanotechnology and material science. Productivity growth will be also strongly influenced by changes in workplace relations, competitive conditions and the social environment.
According to Productivity Commission (2005) predictions, population ageing will reduce effective labour supply per capita by four per cent over the next 20 years. Based on this estimate, the mean prediction of this study suggests that as a result of ageing the mean annual rate of growth in real GDP per capita will be reduced from 1.78 per cent to 1.57 per cent during the forecast period.

The report looks at sectoral rather than aggregate productivity forecasts. This is to highlight expected changes in technologies, a subject that is easier to analyse at the sectoral level. Apart from technological progress economic growth will also depend on factors such as workplace relations, competitive conditions, social environment, population ageing, rising education standards, overseas economic conditions, oil prices and other possible energy-related problems.

The main interest in this report is on labour productivity growth defined in accordance with national accounting conventions as constant price value-added divided by total working hours. Using aggregate labour productivity growth in combination with expected change in the labour force participation rate leads to the predicted growth in GDP per capita.