Australia’s Productivity Crisis: A Nation at the Crossroads

Australia is facing an urgent economic reckoning, with experts warning that the nation’s future prosperity is under threat from a growing dependence on government spending, shrinking productivity, and unsustainable fiscal policies.

According to recent reports from The Australian and The Australian Financial Review, more than half of working-age Australians now receive their main income from government sources — including public sector wages, JobSeeker, family tax benefits, and disability support. This marks the highest level of economic dependency since World War II.

At the same time, the private sector is stalling. Of all new jobs created in the past two years, 82 per cent were publicly funded. In 2024 alone, just 53,000 private sector jobs were added — while public sector hiring surged at five times the normal rate. Economists warn this is distorting the labour market and fuelling a steep decline in national productivity.

“If we don’t reverse this trend, Australia will fall behind,” one analyst cautioned. “We risk becoming a third-world country within a generation.”

Australia’s tax burden is also reaching record levels. In 2023–24, the federal government collected $801.7 billion in total tax revenue — nearly 30 per cent of GDP — the highest level in modern history. Income tax alone is projected to exceed $343 billion by 2025–26, placing unprecedented pressure on households and businesses.

But government spending hasn’t been funded by taxation alone. Over the past decade, the federal government and the Reserve Bank of Australia have significantly expanded the money supply.

One key measure of this is M3, a broad indicator of how much money is circulating in the economy. It includes physical currency held by the public, as well as bank deposits, savings accounts, and other readily accessible funds held at authorised deposit-taking institutions. In short, M3 gives a picture of the total pool of money available for spending, saving, and investment.

Since 2015, Australia’s M3 has surged by 80 per cent, reaching over $3.15 trillion. That means there is far more money in the system — but without a matching increase in the supply of goods, services, and housing, this excess cash drives up prices. It’s a textbook recipe for inflation.

Australians are feeling the consequences in real time: higher grocery bills, soaring energy costs, and worsening housing affordability. Meanwhile, the weakening Australian dollar — another by-product of overspending and monetary expansion — has made imported goods and building materials more expensive, pushing construction costs even higher.

At the same time, inflation has driven investors into property as a perceived safe haven, fuelling further demand and pushing prices out of reach for many Australians.

Critics argue that while governments talk about housing “affordability,” their own policies are making the problem worse. High taxes on income, savings, and investment are discouraging entrepreneurship and risk-taking, slowing private sector growth at the exact time it needs to accelerate.

Former Treasury Secretary Ken Henry has estimated that Australia’s sluggish productivity growth has cost the average worker around $500,000 in lost income over the past 25 years. And the Centre for Independent Studies puts it plainly: “Australia’s prosperity depends on private sector-led growth – not government spending propping up demand.”

Yet, current policy settings are doing the opposite:

• Growing dependence on public sector jobs instead of private enterprise
• Higher taxes, but poorer outcomes
• More money being printed, but less value being created

This isn’t just about budgets or ideology. It’s about whether Australia builds an economy that rewards effort, innovation, and production — or one that fosters dependence, stagnation, and decline.

Join the Adventure: A Call to Action

Turning Australia around won’t happen overnight — but it can be done. And it won’t be driven by governments or handouts. It will be powered by everyday Australians choosing to join the adventure of rebuilding a productive, innovative, and forward-facing nation.

That means:

• Upskilling to increase personal productivity and career resilience
• Starting or supporting small businesses that create real value
• Saying “yes” to trades, manufacturing, construction, and engineering — the industries that actually build things
• Encouraging risk-taking and entrepreneurship, not punishing it with high taxes and red tape
• Demanding smarter, leaner government that enables productivity, rather than consuming it

Australia has always punched above its weight — but the future won’t reward countries that rest on their past. It will reward those who build, solve, innovate, and produce.

The question is simple: Do we want to be a nation that creates value — or one that merely consumes it?

The time to decide is now. Join the adventure — and help rebuild a more productive, prosperous Australia.