When Australia became a nation in 1901, the average Australian had to work for 18 minutes to earn a loaf of bread. By 2019, thanks largely to technological innovation, that loaf cost just 4 minutes of work.
Over the last 3 years things have gone backwards. It now takes 4 minutes and 21 seconds of work to earn your daily bread.
This is because we have since recorded the largest reduction in real wages on record, and have had the slowest productivity growth for 60 years.
If it feels like your living standards are in reverse, that is because they are.
Productivity determines our living standards and we do not talk about it enough. When we produce more with less everyone's wages can rise. Temporary increases in wages can be delivered through higher prices for our goods (like iron ore or coal) or through greater union bargaining power. But long term the only way to lift wages is if there is a greater pie for everyone to share.
Our history shows that this is true. Since 1960 real wages and labour productivity have gone up in step, both rising by around 3 times. So lifting productivity should be a major focus especially when unemployment is at record lows.
Yet the Government's Jobs and Skills summit is paying almost zero attention to productivity and so it has almost zero hope of lifting long term living standards.
The only tangible idea so far has been to give unions more leverage to negotiate agreements across industries, not just with individual businesses. A return to the industrial relations framework of the 1970s will not shift the dial.
After their union love-in is over, it would make sense for the Government to convene a "productivity summit". First on the agenda would be to ask why our productivity growth has slumped to the lowest on record.
The Productivity Commission has just released a paper which sheds some light. Productivity growth has been strong for most sectors of the economy, especially agriculture and mining where our industries are in the top 5 in the world.
However, our productivity performance has slumped for "industrial services". These are the provision of utilities and construction. Most shockingly, our productivity in electricity, gas and water has fallen by over 30 per cent in the past 20 years.
You are paying more for power because we are just not delivering it as cheaply and efficiently as we used to. The cost of energy then flows through to almost all other goods. Our living standards are going backwards.
What may be causing a reduction in the productivity of electricity generation and distribution? Could it be the record amounts we have spent on unreliable wind and solar energy in recent years?
It is hardly mystery requiring the services of Inspector Clouseau. Australia leads the world in investment in solar and wind power and, as a result, our power prices are skyrocketing. Whatever their impacts on the climate, which are minimal while China and India refuse to act on climate, unreliable renewable energy makes our power system less efficient.
Forget all the talk about renewable energy being the cheapest form of power. The problem is that renewable energy only works part time, and a part time worker is less productive than the full time equivalent.
Fixing our energy crisis is the most important step we could take to lift productivity and real wages. That could return us to the growth we have achieved since 1901. We would also avoid us returning to the dark and cold times of 1901, where electricity was not available to everyone all the time.