two general points : • the first is the obvious one which i have made on numerous occasions that the main reasons behind the pick - up in productivity growth have been structural changes made over the past 15 years in the australian economy which have increased flexibility and competitive pressures. these changes include : – further tariff reductions ; – financial deregulation ; – labour market deregulation ; – privatisation ; and – a more stringent regime of competition policy. it has not been easy to put these changes in place, even though there has been for most of the decade considerable bipartisan political support for change. inevitably, compromises have had to be made and, viewed in isolation, some of the individual changes do not look to be all that thorough - going. but taken together, i think the total is larger than the sum of the individual parts. of course, one aspect of the economy that was not reformed during the period covered by these calculations was the tax system. but that finally changed a couple of months ago when a goods and services tax was introduced to replace the old wholesale sales tax and to take some of the weight off income taxes. • the second point about productivity i want to make concerns the new economy / old economy divide. some people tend to judge a country ’ s technological sophistication by, for example, the number of listed companies in the it sector. although australia has a number of companies that fit this description, about 70 or so in fact, their combined share of the stock market is not large by international standards. but that is only one measure of technological sophistication. another equally important one is the country ’ s willingness to embrace new technology. this may be a better guide to productivity improvements than focusing only on the it sector. i have two measures of the spread of technology : – the first is internet usage as a percentage of the population, which shows australia in a relatively high position among the countries compiled by the consulting group, nua ( table 2 ). – a measure that is more specific to the business sector is the number of e - commerce servers per head of population. on this measure, australia is second only to the united states ( table 3 ). table 2 internet usage ( per cent of population ) norway united states sweden canada finland australia denmark netherlands uk switzerland slovenia austria taiwan south korea belgium germany japan italy ireland new zealand source : nua. ie. most data from late 1999 - early 2000 surveys table 3 e - commerce servers country / region

philip lowe : resilience and ongoing challenges keynote address by mr philip lowe, deputy governor of the reserve bank of australia, to the udia national congress 2016, adelaide, 8 march 2016. * * * accompanying charts can be found at the end of the speech. i would like to thank craig evans for assistance in the preparation of this talk. it is a real pleasure for me to be back in adelaide today. i would like to thank the urban development institute of australia ( udia ) for the invitation to be part of your national congress in this beautiful city. i previously spoke at a udia national congress in 2010. that year it was held in sydney. on that occasion, i spoke about how and why the australian economy had come through the severe global downturn in much better shape than most other countries. i spoke about the expected upswing in mining investment and the positive effect that it was likely to have on our economy over the next few years. and i spoke about three specific challenges : the need to expand the supply side of the economy ; the need to get a better balance between supply and demand in the housing market ; and the need to ensure that inflation remained low and stable. in the six years since then, a lot of water has flowed under the bridge. the global economy has had a recovery of sorts, although the average growth rate is still below what it was before the crisis. in australia, the expected boom in mining investment did take place, leading to a large increase in our production capacity. for a time, this did result in the economy growing at an above - average pace, but this has been followed by a few years where growth has averaged below trend as mining investment returned to more normal levels. in terms of the challenges that i spoke about six years ago, the issue of expanding the supply side of the economy and boosting productivity growth is just as pressing as it was then. a bit more positively, in the housing market we now appear to have a better balance between supply and demand. and in terms of inflation, the outcomes in australia – and almost everywhere around the world – have been lower than was earlier expected. today, i thought it might be useful to again touch on these broad themes – the resilience of our own economy, the productivity challenge, the balance in the housing market and the inflation outlook. the resilience of the australian economy so first to the australian economy. here, the main point to emphasise is the resilience