servers per million population july 1998 march 2000 united states australia new zealand switzerland canada scandinavia uk other eu japan korea source : www. netcraft. com and oecd so, in terms of willingness to adapt to new information technology, australia would get a very high score. this, along with the measures i mentioned earlier, helps to explain why there has recently been such a significant lift in the rate of growth of productivity. a big lift in productivity growth has a beneficial effect on many areas of the economy. a lot of it is passed through to consumers and, in the process, this makes it easier to maintain low inflation. some of it can also make businesses more profitable, which is, after all, the incentive that drives much of the efforts towards improving productivity in the first place. the two broadest measures of corporate profits as a percentage of gdp in australia have been trending up over the past decade, with profits after interest showing a much sharper rise than profits before interest, again another indirect benefit of a low inflation ( graph 2 ) decade. with good growth and good profitability, businesses have been keen to hire staff. as a result, employment has grown strongly and the unemployment rate continues to decline ( graph 3 ). again, a comparison with the united states is interesting - during our expansion, the unemployment rate has fallen by 4. 8 percentage points compared with a fall of 3. 7 percentage points for the united states. the fact that their level of the unemployment rate, at 4. 1 %, is lower than ours, at 6. 4 %, is due to their lower starting point, in part a result of the relatively mild nature of their early 1990s recession. there are two other things i wish to touch on before concluding. the first is the exchange rate, which has attracted a lot of attention and soul searching this year. it is surprising that in an economy showing the medium - term characteristics i have just outlined, the exchange rate is so weak. if we refocus our attention to the immediate period, the puzzle is, if anything, greater. we have an economy growing at well over 4 %, and probably more like 5 %, with exports rising rapidly in the context of the strongest world growth for a decade, rising commodity prices and high corporate profitability. why markets are placing such a low valuation on the australian dollar is not a question i can easily answer, any more than i can answer why valuations in some equity markets seem so high relative to normal

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