The core message from BT Chief Economist Chris Caton is that Australian productivity needs to grow if we are to have any increase in living standards. This message from Caton reinforces the importance of an upshift in productivity highlighted in a recent speech by RBA Deputy Governor Lowe, “it is unlikely that growth in our living standards will again come from a sustained lift in our terms of trade, which remain high in a historical context despite the falls of recent times.” So the question is how does Australia lift productivity? Caton believes that “in the medium term you look at the things that may be holding productivity back, the Deputy Governor had a list that included in part competition and innovation. I would put in that list infrastructure and education”. In the second half of this video Caton has some insightful views on the PM change and the effects this shift may have or may be already having on business confidence.