At the same time, he said many Australians were getting used to lower growth in their real wages. RBA governor Philip Lowe: "The outlook for non-mining investment has improved recently and reported business conditions are at a high level." Credit:Louie Douvis "Many now see this as more than just a temporary development, with wage increases of 2 point something per cent now the norm," he said. "At the same time, the household sector is also dealing with higher levels of debt relative to income. Higher electricity prices are also affecting household budgets." Dr Lowe said wage growth remained at or near record lows despite the success of the economy in creating jobs, with the share of profits going to labour at a five-decade low, while the share going to capital had moved to a five-decade high.

"The fact that it is a common experience across countries suggests some global factors are at work," he said. In response to questions from Greens MP Adam Bandt suggesting neo-liberalism was in its death throes, Dr Lowe said that would not be his conclusion. 'Difficult adjustment' "We are going through a difficult adjustment period," he said. "It's uncomfortable for everybody but we'll get through it. "I wouldn't be chucking out the whole system because workers are feeling a bit besieged by technology. I don't think it will be too long before we all start to feel a bit better again."

He said demand for workers was strongest in growth industries, but workers felt a heightened sense of potential competition, either from advances in technology or from international competition. I wouldn't be chucking out the whole system because workers are feeling a bit besieged by technology. "More competition means less opportunity to put your price up. In the case of workers, it means slower rates of increase in wages," he said. "At the same time, many workers feel an increased sense of uncertainty and they feel less secure. It is possible that these effects will pass and that the normal relationship between tighter labour markets and higher wages will reappear. It is also possible that the current environment turns out to be quite persistent." "How things turn out on this front is likely to have a significant bearing on the next stage in the global economic cycle."

​Rates to rise, but not yet Dr Lowe said the next move in interest rates would most likely be up, but was "quite some time away, if things turn out as we expect". CommSec senior economist Savanth Sebastian said Dr Lowe's commentary was similar to the bank's monetary policy statement released a fortnight ago. "His comments today reinforced our view that interest rates are likely to remain on hold over the next 12 months," he said. Dr Lowe defended the bank's decision to discuss a neutral interest rate at the July meeting, which triggered a rush on the Australian dollar as investors anticipated Australia following other central banks by raising rates.

"It might have been handled better but the community now understands that we discuss these issues," he said. High $A weighing on outlook The high Australian dollar was weighing on the economic outlook. "Further appreciation, all else constant, would cause a slower pick-up in inflation and slower progress in reducing unemployment," he said. The long-predicted uptick in business investment was taking "longer to occur than expected".

"While we do see positive signs in parts of the economy, many firms still show some reluctance to commit to significant investment, often citing a range of uncertainties. It is possible that this reluctance will continue for a while yet. "But it is also possible that the improvement in business conditions that we have seen will give firms the confidence to invest more, after a period of under-investment. "We have incorporated a middle path into our own forecasts." Loading Dr Lowe said the bank's central scenario was for gross domestic product to grow at an average of about 3 per cent over the next couple of years. That would be "better than we have seen for some time".

The transition to lower levels of mining investment following the mining investment boom was almost complete.