The Joe Walker Podcast Australia’s ‘Great Stagnation’: Everything You Need to Know About The Productivity Crisis — Greg Kaplan & Michael Brennan
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Aug 14, 2025 Greg Kaplan, an esteemed economist and chairman of e61, joins Michael Brennan, CEO of e61 and former chair of Australia’s Productivity Commission, to discuss Australia's productivity stagnation. They delve into productivity challenges within the construction sector and critique GDP as a welfare measure. The duo emphasizes the need for reform in sectors like healthcare and education to fuel innovation. They also explore the gaps in productivity across industries, the significance of economic reforms during the '80s and '90s, and the future implications of embracing AI in Australia.
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Durability Limits Construction Productivity
- Construction productivity can stagnate because easy, high-productivity sites get used up and are not reproduced year-to-year.
- Building is an incremental addition to a durable housing stock, so later units tend to be harder and less productive to construct.
Planning Often Trumps Construction Productivity
- If planning binds (vertical supply), productivity gains will mostly flow into rents not extra housing.
- Relaxing planning constraints can increase supply faster than incremental productivity improvements in construction.
Agglomeration Gains Face Congestion Trade-Offs
- Agglomeration gains (matching, knowledge spillovers) compete with congestion costs as cities densify.
- Bigger is not always better: gains vary by scale and local infrastructure quality.