Liz Ritchie, CEO of the Regional Australia Institute and a former Ute Muster leader, says Australia is trying to solve its productivity crisis without properly measuring where much of the nation's productivity is created, leaving decision makers without the full picture when designing economic policy.
RAI research found that official productivity measures rely on national and state averages, which mask how individual regions are performing, making it harder to see where productivity is growing, where it's lagging, and where investment could deliver the greatest returns.
This puts a handbrake on a region’s ability to manage and grow its own productivity.
The findings come as Australia's productivity growth has slowed to just 0.3 per cent a year over the past decade, weighing on wages, living standards and the nation's long-term economic growth.
Despite facing ongoing infrastructure, workforce and climate challenges, regional Australia recorded higher labour productivity than metropolitan Australia in 2024, generating $129.70 in output per hour worked compared with $103.10 in metropolitan areas, demonstrating the significant untapped potential of Australia's regional economies.
"Every region has its own mix of industries, workforce and infrastructure. National averages mask that, and policy misses the mark as a result,” Ms Ritchie said.
“Put simply, a one-size-fits-all approach to productivity policy is leaving significant gains on the table.”
RAI analysis shows some regional economies are delivering productivity levels up to five times the national average.
"Australia’s regions have significant capacity to grow. Australia's next wave of productivity growth will come from backing high-performing regional economies with investment and locally led policy, to help more regions – and the nation – reach their potential,” Ms Ritchie said.
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