income and thus demand. over the past five years, the prices of australia ’ s commodity exports have fallen by more than 50 per cent and australia ’ s terms of trade have fallen by 35 per cent as a result, which is the main reason that growth in national income has been weak over recent years. the third factor is the feeling of reduced pricing power, partly from greater competition. one good example of this is in the retail sector, where the entry of foreign retailers has made a real difference in groceries and clothing. over recent times, food price inflation has been unusually low and the prices of many goods have not risen as quickly as suggested by the conventional relationship with import prices. 1 increased competition has forced existing retailers to find efficiencies to lower their cost bases and, in turn, their prices. reflecting this, there has been a pick - up in the rate of productivity growth in the retail sector, which is good news for consumers. more broadly, though, many australian workers are facing some of the insecurities that workers in other advanced economies are facing. the effects of these three factors – excess capacity, lower commodity prices and reduced pricing power – are evident in the wage outcomes in australia. in particular, the wage price index 6 / 13 bis central bankers'speeches ( wpi ) has increased by just over 2 per cent over the past year, which is the slowest rate of increase since the series began in the late 1990s ( graph 5 ). the reserve bank and the abs have been working together to obtain some additional insight into what is happening here. together we have looked at the wage increases for all the 18, 000 individual jobs that the abs uses to construct the wpi. the results are interesting. over recent years, there has been a decline in the frequency of wage increases and, when wage increases do occur, the average size is lower ( graph 6 ). the decline in the average size of increases is largely due to a very sharp drop in the share of jobs where wages are increasing at what, by today ’ s standards, would be considered a rapid rate. for example, six years ago, almost 40 per cent of the 18, 000 individual jobs being tracked by the abs received a wage increase in excess of 4 per cent ( graph 7 ). in contrast, over the past year, less than 10 per cent of jobs got this type of wage increase. and almost half of the individual jobs tracked by the abs had a wage increase of between 2 and

the regulatory reforms that have already been broadly agreed, but being wary of adding further reforms to the work program. absent some major new development, which brings to light some major reform need not hitherto visible, to task the regulatory community and the financial industry with further wholesale changes from here would risk overload. lest this be considered too weak a position, let us remember how much is being attempted. and since we are already seeing the need to “ tweak ” some earlier agreed proposals, it is surely clear that the details of implementation should increasingly be our focus over the next few years. the g20 will need to remain open to the possibility – the likelihood even – that as experience is gained with implementation and we grapple with the inevitable difficulties, and as we learn more about how the financial the relevant standards are the fsb ’ s key attributes of effective resolution regimes for financial institutions. work is also underway by cpss - iosco to establish how best to apply the key attributes to financial market infrastructures. bis central bankers ’ speeches system is likely to operate in a new world, we will want to make occasional adjustments to the rules. none of that ought to be seen as a retreat from the high level objectives that have guided efforts to date : the desire for a more stable, more resilient and simpler financial system, that is better able and more inclined to play its “ handmaiden of industry ” role and better able to withstand failures of individual institutions. but in pursuing these goals, it is important that we : • strike the right balance between more regulation and more effective enforcement of existing regulation. inadequate enforcement and supervision was as big a problem as deficient rules • recognise the cross - border aspects of the financial system, with the associated need for cooperation and, yes, compromise. recognition of the legitimate interests of smaller markets is clearly of importance to australia but many other jurisdictions as well. this often coincides with the role of pushing for a principles - based approach instead of a one - size - fits - all heavy - handed, rules - based approach. it may also involve working to develop a “ regional voice ” on some issues • consider the combination of reforms in their entirety, and keep a lookout for unintended consequences. given the breadth and speed at which reforms have been introduced in recent years, careful analysis of how the various initiatives will interact is becoming more important. keeping the regulatory structure fit for purpose across a broad range of jurisdictions around the world is in fact a