Productivity might be the word on everyone’s lips in the lead up to the Albanese Government’s Economic Reform Roundtable  however weak productivity isn’t the cause of many of the problems experience by workers in Australia today nor is increasing productivity the solution. Rapid inflation after the pandemic, combined with rising interest rates and slow wage growth, left many Australian households struggling to afford necessities. The Reserve Bank’s (RBA) blunt strategy of raising interest rates to slow the economy post the pandemic both misdiagnosed the drivers of inflation and harmed Australian workers who struggled to manage increased mortgage repayments and other debts. The root causes of Australia’s post pandemic crisis—rising corporate profits, unjustifiable price hikes, and deep wage stagnation were ignored by the RBA.

Despite a reduction in inflation and interest rates, too many Australians are still experiencing lower living standards after the turbulent events of the past five years. Official inflation figures may capture broad economic trends however, they do not adequately describe the real pressures experienced by working people—particularly when it comes to the impact of the increasing costs of essentials like food, housing, and energy. Australian workers can ill afford another round of RBA driven unemployment, austerity, and uncertainty.

What will it take to repair the damage to Australian workers’ living standards?

In a new publication, Solving the Crisis: Raising the Living standards of Australian workers, some of Australia’s leading progressive economists and social policy analysts explain what is going on and how to fix it. The origins of the current crisis in living standards are documented. A progressive policy agenda for a second term Albanese Government is advanced.

The multidimensional policy agenda in Solving the Crisis calls for

• increases in real wages
• achieving full employment
• better quality jobs and greater assistance and respect for those seeking employment
• strengthening public services (including health care, childcare, aged care and education)
• making fair and affordable housing available
• developing a well-planned and supported transition to renewable energy sources.

The key to the success of this agenda is centering the experience of workers’ and their families.

Australia should adopt a progressive multidimensional economic agenda that lifts living standards, reduces inequality, and strengthens democracy, rather than a narrow concentration on productivity. Uniting people behind this progressive economic agenda helps counter the trend towards increasing inequality, division and conflict, that has been present in other countries.

How to solve the living standards crisis

Four policy papers are the core of  Solving the Crisis. These papers examine the main drivers of inequality and deteriorating living standards in Australia

• Greg Jericho examines how inflation is misunderstood when disconnected from wage growth. He proposes a shift in Reserve Bank policy and a renewed focus on promoting real wage increases.
• Peter Davidson  argues that growing inequality is not inevitable. Through strengthening the four key policy pillars – income support, minimum wages, full employment, and employment services – minimum incomes can be raised and inequality reduced.
• Thomas Greenwell highlights how decades of declining collective bargaining and high underemployment have undermined living standards. He calls for renewed support for unions, stronger collective bargaining systems, and a focus on full employment in macroeconomic policy.
• Charlie Joyce revisits the concept of the social wage—and argues that rebuilding and expanding the social wage can raise living standards, promote inclusion, and restore trust in democratic institutions.

Together these papers provide practical policy solutions forming a platform for economic reform.

Solving the Crisis helps working people to help cut through economic misinformation and political spin, offering a clear lens on the structural factors that have driven inequality and declining living standards.

Progress is happening

In its first term the Albanese Government has made cautious progress on living standards. This progress includes labour market reforms that have contributed to stronger wage growth. These reforms include supporting increases in the minimum wage, facilitating collective bargaining in hard-to-organise industries, funding support for wage increase in early childhood education and aged care. Cost-of-living measures, like energy rebates and expanded renter assistance, also provide important support to hard-hit households. Meanwhile, the easing of interest rates by the RBA—better late than never, may support future growth and job-creation.

However, while prices are growing more slowly, the levels of many prices remain too high—especially for necessities like food, housing, and energy. Wages growth may have commenced however at the current pace, it will take several years to repair real wages, and restore the same purchasing power for workers they enjoyed before the pandemic. The quality of public services (another critical determinant of living standards) has been damaged by underfunding and overreliance on privatised provision, the costs of which we are currently seeing in early childhood education and care. Minimum income payments such as Jobseeker remain woefully inadequate. The system designed to support and assist people from unemployment into decent jobs is broken beyond repair. Meanwhile, global economic and geopolitical uncertainty threatens to derail this modest recovery before it really gets going.

More work to be done

At the 2025 federal election the Australian people rejected political parties proposing cuts to public services, short-term fixes (like petrol tax cuts), and the politics of division. In its second term the Albanese Government has a unique opportunity to implement progressive policy changes such as those contained in Solving the Crisis.

More details about Solving the Crisis and additional resources are available at https://www.carmichaelcentre.org.au/living_standards.