How Bad is Australia's Economic Performance and Why?*

Abstract

While public concern about Australia's relatively poor growth performance is recent, our performance has been poor for a long time. Practically the whole of our slide down the income‐per‐head totem pole occurred before 1973. The paper advances the argument that ‘made to measure’ protection and widespread restrictive trade practices used to be one of the main factors retarding faster growth in Australia before the seventies, though deteriorating terms of trade have also been important. The profit squeeze resulting from real wage inflexibility during the seventies has probably played an important role since then. There is no evidence to support the contention that our poor growth is the result of the expansion of the public sector.

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