Australia is falling behind. Bosses are too much like Zog and not enough like Americans

Opinion

June 30, 2026 — 5:00am

Fans of Gary Larson’s Far Side comics will remember how often he features a neanderthal – usually named Zog – working on a wheel.

One of his funniest, and most attuned to the Australian economy, comics is simply entitled “early experiments in transportation”.

A man has been tied to the top of a stone wheel that his “friends” are about to roll down a grassy hill.

In another, a caveman stands back looking at his stone car. The only problem is that it is missing the four things it needs to move – wheels.

I’m not sure if Gianni La Cava, research director at independent think tank e61, is a fan of Larson and his wheel comics, but he should have attached one to his latest piece of work on a worrying trend that they’ve observed.

La Cava and his team at e61 have pinpointed a big issue that has afflicted Australia for way too long – and it goes to how most of our businesses are, like Zog, simply unwilling or unable to use technological breakthroughs to their advantage.

Technology, and its use, is at the heart of productivity.

From the water wheel to the steam engine to railroads to the light bulb to the internal combustion engine to powered flight to refrigeration to the telephone to the PC, advances in technology have been the driver of improved living standards for millennia.

If a business doesn’t use that technology, then they don’t enjoy the improvements in output or cost reductions that firms that do use it achieve.

That seems like common sense. It’s why it’s funny that Zog and mates create a wheel that can amuse their pet dog rather than build a cart to carry their belongings.

La Cava has found that there are too many Australian businesses like Zog.

It comes down to intellectual property, particularly research and development and the computer software used by Australian businesses (and their American counterparts).

American businesses are at the global forefront of developing and using IP and software that is then used around the world by firms looking to improve their operations.

According to La Cava, what’s happened in two particularly important parts of the economy – manufacturing and information – largely account for Australia’s lousy productivity performance since the start of this century.

Put simply, Australian businesses don’t invest enough in IP – effectively the cumulative knowledge of a firm and its staff – and even then, they rarely use it as well as American businesses even if those US firms are based here in Australia.

The Australian subsidiaries of American-owned businesses invest at around the same level as their US counterparts. Australian-owned firms in the same sectors don’t invest nearly as much in IP and the use of that knowledge.

La Cava found that US-owned subsidiaries in Australia are “significantly more productive than Australian-owned firms in the same sectors”.

Why?

“Australia’s productivity challenge is not just about increasing IP investment, but about improving the ability of domestic firms to adopt and apply existing technologies,” La Cava found.

“This points to the importance of management capability, skills, organisational capacity and financing systems that support firms scaling into adoption. Labour market and competition settings that facilitate knowledge diffusion are also likely to matter.”

A few years ago, a senior Treasury official was lambasted by the Australian business press (and local titans of industry) after he told a parliamentary committee that Australian business management wasn’t all that good by international standards.

This e61 analysis effectively comes to the same conclusion.

Put it this way. US-owned manufacturing companies working in Australia produce more or about the same value-add per worker than even their parent companies’ average. But it’s twice the level of Australian-owned firms in the same industry.

That’s not to say there aren’t good Australian managers out there.

La Cava noted that pizza giant Domino’s rolled out new tech in the mid-2010s which lifted sales per store and improved labour hours per delivery. In a win for consumers (and the business), pizza productivity improved.

The Commonwealth Bank, Telstra, Qantas and Virgin are using US-built cloud and AI infrastructure in ways that are sharply improving their productivity levels, suggesting their managers know what they’re on about.

Costco, whose giant warehouses contain huge bulk specials of loo paper and peanut butter, operates under the same wage and regulatory framework as Coles and Woolworths. But Le Cava notes Costco’s sales per labour hour are several times those of its better-known competitors.

Costco’s HQ is in the United States.

There’s been thousands of words written about Jim Chalmers’ budget and the tax measures it contained, with warnings they will kill aspiration, the property market and productivity. There’s barely been a paragraph uttered about Chalmers’ $10 billion productivity package, which includes major changes to research and development incentives aimed at growing our bright young firms.

The e61 research shows the knowledge already exists for Australian businesses to lift their performance.

La Cava argues that if we are to boost productivity levels, then we should focus on skilled migration, post-study work rights, STEM education, non-compete clauses, management training, and competition settings.

As Zog would say: Good.

Shane Wright is a senior economics correspondent.

The Opinion newsletter is a weekly wrap of views that will challenge, champion and inform your own. Sign up here.