AUSTRALIA’S PRODUCTIVITY CRISIS: WHAT IT MEANS FOR MALTESE-AUSTRALIANS
By Economist
Australia has stopped getting richer. That is the stark warning from Chris Bradley of the McKinsey Global Institute. In the past decade, the nation’s productivity growth has been almost zero. Living standards have stalled. All recent economic expansion has come from more people and harder work—not from greater efficiency.
Bradley calls productivity simple. It is the amount of value produced for every hour of human effort. When it rises, societies grow richer. Australia once led the world. From 1820 to 1920 it was the fastest-growing economy on earth. Enlightenment values, property rights and open markets drove that boom. Melbourne briefly held the highest GDP per head. Today the story has reversed.
Two clear mathematical causes stand out. First, the non-market sector has ballooned. Public service, education and health jobs now claim nearly 30 per cent of all working hours, up from 20 per cent thirty years ago. Second, investment has dried up. Capital per worker, the tools and equipment that multiply human effort, has stopped rising. Bradley notes that roughly 80 per cent of productivity growth comes from such investment. Australia simply stopped attracting it. Energy and construction suffer most. The country can neither build nor power itself effectively.
The deeper problem is cultural. Australia has forgotten the golden goose of growth. Few recent laws focus purely on investment and expansion. High commodity prices, a buoyant property market and rapid population growth have masked the decline. On paper the nation still looks rich. Beneath the surface the engine is smoking. Only one in five Australians now believes the next generation will be better off. Zero-sum thinking has taken hold. Growth is no longer seen as possible or desirable for everyone.
Bradley argues that progress rests on a “machine”: energy, capital, skills, cities, large firms and trust. Large companies drive most research and productivity gains. When societies turn against them, or against entrepreneurs, the machine sputters. Collectivism and endless regulation throw sand into the gears. Australia’s experience shows how prosperity can breed complacency. Success itself becomes the enemy of further success.
The path forward is clear. Prioritise growth again. Restore investment. Free the energy and construction sectors. Celebrate standout firms rather than restrain them. Believe that another century of rising living standards is possible. Without that shift, Australia risks permanent stagnation.
For Maltese immigrants and their descendants the implications hit close to home. Nearly 200,000 people of Maltese ancestry live in Australia. The largest clusters sit in Melbourne’s western suburbs such as Sunshine, St Albans, Melton and Brimbank, and in Sydney’s west around Pendle Hill, Greystanes, Blacktown and Llandilo, where more than one in four residents claim Maltese roots. Post-war migrants built these communities through factory work, construction and market gardening. Today many of the first generation are over 65 and reliant on pensions and aged-care services, the very non-market sectors that have swollen while productivity has stalled.
Younger Maltese-Australian families face the sharper edge of the crisis. Inefficient construction has kept housing scarce and expensive in the outer suburbs where the community is strongest. High energy costs squeeze household budgets. Stagnant wages make it harder for the second and third generations to match the home-ownership gains their parents achieved after arriving on the £10 assisted passages. Community clubs and parish networks that once thrived on rising living standards now confront tighter finances and weaker optimism among the young. Without a return to genuine productivity growth, the Australian promise that drew tens of thousands from the Maltese islands risks fading for the next generation of Maltese-Australians.