This raises concerns about future living standards unless reforms and advances such as AI bring significant improvement.
Productivity growth in Australia has stalled over the past decade. Workers currently generate about $110 worth of goods and services for every hour worked. This number is important because it supports wage growth, living standards and overall economic health. Despite some progress in previous decades, productivity has remained flat since a short-lived increase during the COVID period. This stagnation is affecting job quality, innovation and the country's ability to stay competitive.
The $110 figure is calculated by dividing total national output - roughly $660 billion in a single quarter - by the 6 billion total hours worked across the economy. The Productivity Commission views this as a serious warning. In past decades, the figure was closer to $75, but major reforms, improved policies and the use of new technologies helped drive it higher. That growth has now stalled, and no single solution is expected to offer a quick fix.
Business leaders believe AI could help solve the problem. Some estimates suggest AI could add $116 billion to the economy over ten years. Data centre operators and other companies already report early gains from AI, with improvements in automation, reliability and data analysis driving better results. Still, these same businesses note that Australia's strict regulatory environment, extended approval times and high labour costs limit the ability to scale rapidly.
AI holds real potential to improve productivity, but progress is restricted by policy inaction, infrastructure issues and a lack of coordinated national effort. Industry leaders in the tech sector say clear direction from government is needed to encourage investment and stop Australia from falling behind countries like Singapore or the US. Delays in decision-making mean projects take more than a year longer in Australia than in some other Asian nations.
Skills development will also be key. Experts in industry argue that short-term, practical training partnerships between government and tech businesses are essential to upskill the workforce in AI tools and applications. This is not just about university degrees, but about developing the ability to use technology to address real-world problems. At the same time, greater investment in transmission and energy storage infrastructure will be needed to support technology demands, especially in data-heavy sectors.
Australia is at a critical point. Without decisive action, its ability to compete globally will suffer. AI offers a rare opportunity to turn around the productivity slowdown, but it will take coordinated efforts from government, business and education to succeed. For now, the $110 figure remains a signal - one number that captures a deeper, broader challenge.
