Productivity growth in Australia has slowed down significantly over the last two decades, with output per hour worked in the services sector falling behind other advanced OECD nations. A core structural issue is the slow adoption of advanced digital technologies and artificial intelligence by small and medium enterprises (SMEs), combined with regional broadband disparities outside major metropolitan hubs like Sydney and Melbourne. This digital divide restricts remote work efficiency and limits the expansion of high-value knowledge services.
To address this, economists suggest a mix of market-led tax reforms to incentivize private R&D alongside targeted interventionist policies in digital education and technical retraining programs. In contrast, South Korea has aggressively funded national artificial intelligence infrastructure and offered generous tax credits for digital transformation, enabling it to maintain rapid productivity growth in its high-tech service sectors.
Extract G states: 'In contrast, South Korea has aggressively funded national artificial intelligence infrastructure and offered generous tax credits for digital transformation, enabling it to maintain rapid productivity growth in its high-tech service sectors.'
Explain two policies that the government could adopt to try to increase labour productivity in Australia.
245 exam-style questions on AQA A Level Economics 2.5 Fiscal policy and supply-side policies, covering 2.5.1 Fiscal policy and 2.5.2 Supply-side policies. Each one has a worked solution and a mark scheme showing where the marks go.