"It is important that we have a sharp focus on the reforms that can make a real difference to our living standards, If we don't do this, we will fall behind." Philip Lowe said the RBA would be reluctant to cut rates, even if weak wage growth and weak inflation made it appear necessary. Credit:Bloomberg His remarks come as the Turnbull government looks to negotiate the Gonski 2.0 schools funding package through the Senate. Dr Lowe said investment in human capital through education was the key to driving the economy forward. He expected the economy to pick up after a sluggish start to the year once the "animal spirit starts to come back." The central bank's optimism on the outlook is a major reason it has resisted pressure for another cut in interest rates, which are already at record lows of 1.5 per cent.

Dr Lowe conceded there were hurdles ahead including slow wage growth, high levels of household debt and rising home prices in some of the major cities. RBA governor Phil Lowe says a fear of losing their jobs to automation is holding back Australians from asking for pay rises, creating the 'real crisis' in our economy. Credit:Dhiraj Singh "[Globally] The big four economies have the lowest levels of unemployment in decades, you don't expect to hear that during a labour crisis," he said. "The crisis really is in real wage growth. Western workers feel like they cannot get a pay rise." NAB chairman Ken Henry. Credit:Christopher Pearce

In May, Australian real wage growth entered negative territory and stalled at an all time low. Wages are now growing below the pace of inflation, making everyday items more expensive. Dr Lowe said workers were "worried about foreigners and robots" and that this fear of competition had discouraged them from asking for a pay rise. "When anyone feels like there is more competition they are less inclined to put their price up," he said. "People also value security, one way to increase security is not to get a pay rise." "The problems we are talking about here aren't going to be solved In a couple of years, they are going to be solved in a decade," he said. Dr Lowe said he expected the tighter labour market to eventually result in people asking for higher wages and the distinction between "part time and full time work was old fashioned."

"Some people working a few less hours is a probably a good thing," he said. Former Treasury chief Ken Henry laid the blame for lower wages on the shift in power from workers to technology. "Real average weekly earnings have fallen over the last four years, no one wants that," said the National Australia Bank chairman. He said he felt more pessimistic now than he did in the 1980s despite improvements in the global economy. The CEO of Corrs Chambers Westgarth John Denton said the fundamental challenge for Australia was how to manage economic integration and technological revolution.

"Those two forces have been such a disappointment for many," he said, leading to the rise of populist politics and the ongoing stalemate described by Dr Lowe. Loading "There are people we know who will never be able to see these new jobs we have promised, because they won't be able to participate." with wires