My guess is a fair bit of this is mis-measurement arising from our quite radical shift to a digital economy. Stubbornly low wages are a broader problem. Credit:Gabriele Charotte But the other explanation may be a decline in price competition in many industries, thanks to several decades of both natural and government-facilitated rent-seeking by big businesses, in ever-more concentrated industries. Next, wages. It's too soon to conclude that wage growth – which in Oz has been slowing since mid-2012 and been pathetically weak for three years – is down for the count. We don't yet know how much of the weakness is merely cyclical and how much is due to deeper, longer-lasting, structural causes.

Even so, it's hard not to suspect that a fair bit of the wage weakness is structural. My guess is that while we've been busy decentralising wage-fixing and removing all provisions thought to favour unions, globalisation and technological change have conspired to rob the nation's employees of any collective bargaining power. This may sound like a dream come true for business and its high-paid executives but, if it's true, it's deeply destabilising overkill. Wages are a key variable in the economy. Allow them to be either too high or too low and the economy gets out of kilter. Allow the profits share of national income to keep continually expanding at the expense of the wages share and expect to pay a price economically, socially and politically. And that's before you remember that wages are the chief source of governments' tax revenue. Not only personal income tax, but all the indirect taxes – notably, the goods and services tax – that households pay when they spend their labour incomes.

Low nominal wage growth isn't necessarily a worry if, at the same time, the rise in consumer prices is low. What matters to working households and the rest of the economy (but not governments) is what's happening to real wages. In a healthily functioning economy, real wages should rise pretty much in line with the improvement in the productivity of labour. That way, both labour and capital get their fair share of the fruits of economic progress.

Trouble is, in the US this relationship broke down maybe 30 years ago, explaining why the top few per cent of households have captured most of the growth in the nation's real income over that time. This doesn't just widen the gap between rich and poor. By directing so much income growth away from the high spenders at the bottom and middle to the high savers at the top, it slows growth in consumption and thus production. It also adds to the disillusionment of ordinary voters, making them more likely to lash out and vote for the cunning wacko celebrity-de-jour candidate, such as Clive Palmer, Pauline Hanson or Donald somebody​. Get this: there are tentative signs the relationship between real wage growth and labour productivity may be breaking down in Oz. The relevant indicator, the index of real labour costs per unit, should hover around 100. It fell by 3.3 per cent during 2016, reaching 98.1, equal lowest since the series began in 1985.

If this weakness persists, it will raise the question of whether the formerly healthy relationship was a product of market forces, or if the industrial relations system's achievement of a fine balance between employer and union bargaining power. If it does persist, how could we return to a healthy relationship? By reversing the dominant wisdom of many decades, that governments must never do anything that adds to the regulatory burden on employers. By acting (very carefully) to strengthen the hand of union collective bargainers. Final point: governments of all colours secretly rely on bracket creep to help tax collections keep up with the inexorable growth in government spending. But bracket creep depends on both reasonable inflation and real wage growth to work its barely noticed fiscal magic. What happens if inflation stays low and real wages stop growing? You have to junk your rhetoric about smaller government and keep doing what Malcolm Turnbull did in this budget: justify explicit tax increases.

Loading Either that, or get wages growing properly. Ross Gittins is the Herald's economics editor.