The Australian economy has become increasingly dependent on population growth as a basis for overall economic growth over the past three decades. This has meant that, while headline economic growth has generally been strong, per capita growth—which is a more direct measure of living standards—has slowed.

It is widely recognised in economics literature that productivity growth is the only mechanism by which long-term improvements to living standards can be achieved. While adding more people to an economy will grow that economy, the contribution that those people make needs to be shared among a larger population. In addition, expansions to population (which result in increased demand) without corresponding increases in productivity (supply) exacerbate inflationary pressures and put excess strain on economic and social amenities such as schools, roads, hospitals, and welfare.

This research report analyses the change in the components of Australia’s economic growth since the year 1990. Specifically, the focus is on the ‘Three P’s’: growth in the civilian population over the age of 15 (Population), growth in the number of hours worked per person (Participation), and growth in labour productivity relative to the number of hours worked (Productivity).