Productivity is our chosen weapon
Treasury and RBA claim that this is a new long run equilibrium for Australia. Business needs to adjust to a terms of trade and exchange rate environment that will be very challenging.
How does anyone adjust to operate in that environment? If:
Profit = Price – Cost
Price is set in the market and externally affected by exchange rates.
Cost = Inputs x Productivity
Cost is all that is left for most of us to control. Those businesses that will prosper through this period of structural adjustment will have focussed on productivity and innovation.
How we help you is by addressing Y=(Kα+Lβ)i