Signs are already not good for Chalmers' productivity testament
Policy festivus is celebrated in Australia when a political party is ascendent but its courage is in retrograde. This cargo cult-style ceremony mimics the Accord, a revered moment in Australian political lore when the Hawke-Keating government brought together the heads of the unions and business to reach a groundbreaking arrangement which, it is widely agreed, set Australia on the path of prosperity.
The Albanese government has shown itself to be a great devotee of the Cult of the Accord. In its first term, it held the Jobs and Skills Summit, which lined up all the key players and ideas to simulate the process. Thanks to meticulous planning, the Rites of Full Employment performed at the summit confirmed the government in its conviction that it is the key player in creating jobs. Those who lack faith say that it is doubtful that the summit has led to actual employment outcomes.
Aglow from its success, Treasurer Jim Chalmers launched his next project, ' Measuring What Matters', or the wellbeing budget. But Measuring What Matters had a problematic feature: it opened a window into a deeper theology. Namely, the question of what exactly wellbeing might be. If there is one thing the Albanese government, dominated by Labor Left, will not tolerate, it is the idea that there might be different conceptions of wellbeing than the one which it preaches.
By the October 2022 out-of-cycle budget, wellbeing had been reduced to a tiny addendum. The following May, it was gone entirely, and the addendum from October had been scrubbed from the previous year's budget papers online. In July 2023, Treasury put the completed paper up online without fanfare. Measuring What Matters was shrunk and sunk.
Not to be deterred – and it is quite refreshing to see a politician doggedly attempt to do his actual job rather than just play politics – Chalmers requested that the Productivity Commission produce a set of proposals for improving Australia's prosperity. This week the first of these dropped, marking the official start of the festival of productivity.
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It's a doozy. The interim report on ' Creating a more dynamic and resilient economy' is brief (under 100 pages), simple and bold. It proposes lowering the tax on companies with revenue below $1 billion from 30 per cent to 20 per cent, replacing the resulting decrease in tax take with a 5 per cent tax on cashflow. Companies with a turnover above $1 billion would continue on the 30 per cent tax rate, as well as paying the cashflow tax. Regardless of size, all companies could immediately deduct capital investment – for instance in equipment needed to grow the business – against the cashflow tax.
The genius of the cashflow tax, which would be the first of its kind in the world, is that it would encourage companies to buy what they need in Australia, creating a further benefit to the economy. In particular, overseas companies with revenue over $1 billion – those that could undertake their procurement anywhere in the world – would have an incentive to make their acquisitions in Australia in order to reduce their tax bills.
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The Australian
an hour ago
- The Australian
Collapse in private-sector job creation as public sector surges
Private-sector job creation has collapsed as employment funded by federal and state governments soars to five times the normal rate, sparking warnings of unsustainable distortions in the labour market that are at the heart of the nation's productivity slump. Analysis of labour-market data shows that 82 per cent of all jobs created over the past two years were government-funded positions, with the private sector adding only 53,000 jobs in 2024. This marks a dramatic reversal of normal labour market trends, in which the private sector typically contributes about two-thirds of total job creation. While Jim Chalmers has ruled out discussion of industrial relations at this month's economic and productivity summit, employer groups are demanding that dysfunction in the labour market needs urgent attention. Australian Industry Group analysis shows that the historically low unemployment rates maintained since the pandemic are masking a fundamental shift in the composition of job creation, which lies at the heart of the nation's productivity slump. It warns that labour-market resilience, as shown in official unemployment data, was being supported almost entirely through government spending, leading to an excess of job vacancies in the private sector. This was unsustainable, according to the Ai Group, which also pointed to a dramatic fall in mobility rates – the frequency of workers changing jobs or roles – to a record low in 2025 that was directly linked to productivity. The analysis showed that the number of new jobs needed for the economy to maintain an unemployment rate of about 4 per cent was approximately 400,000 a year. 'Since the pandemic, this has been achieved, however, the composition of job creation has changed dramatically,' the Ai Group analysis said. 'Typically, the private-market sector accounts for about two-thirds of job creation in Australia. However, as the economy has slowed since 2023, private-sector job creation rates have collapsed. 'In 2024, the sector only added 53,000 new jobs – about a fifth of its normal level of job creation. In its place, two government-supported sectors took up the slack. 'Employment in these government-supported sectors has boomed since the pandemic, adding an additional 670,000 jobs over the last two years. This is over five times higher than the normal growth rate, and ultimately accounted for 82 per cent of all job creation in Australia. 'It was driven by significant uplift in public-sector staffing levels, as well as the rapid expansion of the private-sector (but government-funded) care-economy workforce. One of the Albanese government's key election boasts was its maintenance of low unemployment and job creation. But the bulk of those jobs have been in the public sector (where workers are directly employed by government), and the non-market sector (industries such as healthcare and education) which are driven by government funding decisions. 'Job creation has become unsustainably dependent upon government spending,' the Ai Group research said. 'Growing regulatory burden has raised the costs of private sector employment generation. Job mobility rates have rapidly declined, while excess vacancies and skills shortages have disrupted business operations and efficiency.' The public sector was the least productive part of the economy and, with public spending showing signs of easing, unemployment rates have begun to rise. Last month, the jobless rate surprised experts by jumping from 4.1 to 4.3 per cent. This prompted economists to call for the central bank to lean in further on interest-rate cuts, following its surprise decision last month to keep them on hold, to protect the economy. Ai Group chief executive Innes Willox said the historically low headline unemployment rate had created a 'blind spot to labour-market trends that are decreasing our productivity, our wellspring to national wealth'. 'While the labour market has remained resilient, with the jobless rate around 4 per cent for the past three years, in many other respects it is failing to meet the broader needs of our economy or productivity,' Mr Willox said. 'There are four key areas that are a material drag on productivity: job creation has become almost entirely dependent on government spending; a growing regulatory burden has increased private sector costs; there is a persistent overhang of excess job vacancies; and mobility is declining. 'These all make job creation more expensive and difficult, reduce the efficiency of matching jobs to employers, while disrupting productivity and sapping business growth.'' Mr Willox said there was an urgent need for the private sector to resume its role as the primary job creator 'or our labour market resilience will be at risk'. 'Regulation has pushed up employment costs since the pandemic, with growth in superannuation, workers compensation and payroll tax adding $14bn to the annual wage costs,' Mr Willox said. 'The regulatory costs for employment, on top of wages, have grown to 15.6 per cent from 14 per cent in the past three years. 'We have a plague of excess job vacancies, which disrupts business operations, make it harder to allocate resources properly and less likely to pursue new opportunities for growth.' Mr Willox said the intervention by governments to prop up job creation through their budgets had starved the private sector with about 330,000 jobs remaining unfilled at the beginning of 2025. This was 100,000 more than the historical average. 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Sydney Morning Herald
5 hours ago
- Sydney Morning Herald
Don't let FOMO fool you: Selling Big Bash teams is a bad idea
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Best to reduce costs, run at a surplus over the cycle, invest the proceeds wisely and host more World Cups. That brings us to the fear of missing out. The arguments for: Everyone else is doing it, so why shouldn't we? In particular, the England Cricket Board has sold stakes in the Hundred for seemingly good prices – especially the team based at Lord's. The IPL includes private owners, and is a success, so perhaps this is causation as well correlation? The IPL clubs are globalising and, if they end up contracting players to their franchises across the world on a 12-month basis, the BBL might miss out on having these players involved unless the IPL owners also own BBL teams. BBL clubs might not be able to afford players in demand from other privately owned leagues played in the same window. The core hope is that someone will overpay for the revenue streams CA would otherwise be receiving, or that they can generate more revenue or profit than CA and the states can. The core fear is we need to sell now or be left behind. It's possible a foreign owner can make more money from BBL clubs from overseas sources than CA can, but only if the BBL effectively becomes the Australian leg of a global T20 tour controlled by IPL owners and private equity firms. Think Sydney Knight Riders rather than Sydney Sixers. The question for CA is whether this will help it to grow the game in Australia more effectively than retaining full ownership and control. This seems unlikely. CA and the states are focused on growing Australian cricket and understand the participation and consumption markets better than anyone; foreign BBL owners are not, and won't ever, be focused on this. Nor is Boston Consulting Group. CA's flagship product, international cricket, also runs parallel to the BBL. CA has the ability to manage its schedule to maximise the audience for all formats. This will become far more challenging when private owners are solving only for BBL. And CA will not exercise the same degree of control over Indian billionaires as the Board of Control for Cricket in India does. The BCCI is in effect an arm of the Indian government; CA is not. The nub of the issue appears to be 'If we sell the BBL now we can get top dollar. If we don't, the IPL owners will compete with it and take the players'. This is already happening to a degree, with parallel tournaments over summer in South Africa and the Middle East. Is it therefore better to surrender, to take the money and run? The answer in my view is no. It is a mistake to think the BBL is popular because of specific players. Players come and go and always will. And the BBL makes stars as much as stars make the BBL. BBL is popular fundamentally because it is cricket, it is T20 and it is played in the perfect timeslot – every summer night. Its standing among global T20 leagues is largely irrelevant to Aussie fans. As, frankly, is the IPL. It is also a mistake to think the IPL is better-run. It simply operates in a far bigger market. Which brings us to cricket politics. The argument for: Key figures are in favour of it. The 'privatise' faction has existed in Australian cricket since at least 2011. However, its incentives must be carefully examined. If I am a leading player, player agent, or players' union, I want as much competition for players as possible – except when it comes to restrictions on overseas player slots in the BBL. More owners and more competitions are better. So privatisation is good. CA's incentives are the opposite. If I am associated with a potential investor or stand to make money from a transaction, I want privatisation. CA needs to discount these perspectives accordingly. Loading And if I am an executive or director who wants to be seen to 'do something', or 'leave a legacy', or just do something new, I might want privatisation. That requires a good hard look in the mirror. Administrators are only temporary custodians of the game. 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The Age
5 hours ago
- The Age
Don't let FOMO fool you: Selling Big Bash teams is a bad idea
Cricket Australia certainly has a challenge to grow revenue. Its commercial revenue – sponsorship, ticketing, hospitality etc – has been flat over the past five years, and its domestic media rights deal is essentially flat until 2031. Selling stakes in BBL teams will deliver an infusion of cash. The problem is that selling capital assets such as the BBL is a one-off. It sacrifices future revenue for a lump sum today. Since CA's costs won't reduce, it will still need that revenue in future years. The only way to do this is to invest the proceeds of sale into something that generates at least the same return as the BBL. Loading Effectively, this means the proceeds of sale need to be sequestered, put into the Future Fund and invested in other revenue-generating assets, most likely outside cricket. This might happen, or might not. As governments worldwide show, the temptation to spend tomorrow's money today can be overwhelming. Best to reduce costs, run at a surplus over the cycle, invest the proceeds wisely and host more World Cups. That brings us to the fear of missing out. The arguments for: Everyone else is doing it, so why shouldn't we? In particular, the England Cricket Board has sold stakes in the Hundred for seemingly good prices – especially the team based at Lord's. The IPL includes private owners, and is a success, so perhaps this is causation as well correlation? The IPL clubs are globalising and, if they end up contracting players to their franchises across the world on a 12-month basis, the BBL might miss out on having these players involved unless the IPL owners also own BBL teams. BBL clubs might not be able to afford players in demand from other privately owned leagues played in the same window. The core hope is that someone will overpay for the revenue streams CA would otherwise be receiving, or that they can generate more revenue or profit than CA and the states can. The core fear is we need to sell now or be left behind. It's possible a foreign owner can make more money from BBL clubs from overseas sources than CA can, but only if the BBL effectively becomes the Australian leg of a global T20 tour controlled by IPL owners and private equity firms. Think Sydney Knight Riders rather than Sydney Sixers. The question for CA is whether this will help it to grow the game in Australia more effectively than retaining full ownership and control. This seems unlikely. CA and the states are focused on growing Australian cricket and understand the participation and consumption markets better than anyone; foreign BBL owners are not, and won't ever, be focused on this. Nor is Boston Consulting Group. CA's flagship product, international cricket, also runs parallel to the BBL. CA has the ability to manage its schedule to maximise the audience for all formats. This will become far more challenging when private owners are solving only for BBL. And CA will not exercise the same degree of control over Indian billionaires as the Board of Control for Cricket in India does. The BCCI is in effect an arm of the Indian government; CA is not. The nub of the issue appears to be 'If we sell the BBL now we can get top dollar. If we don't, the IPL owners will compete with it and take the players'. This is already happening to a degree, with parallel tournaments over summer in South Africa and the Middle East. Is it therefore better to surrender, to take the money and run? The answer in my view is no. It is a mistake to think the BBL is popular because of specific players. Players come and go and always will. And the BBL makes stars as much as stars make the BBL. BBL is popular fundamentally because it is cricket, it is T20 and it is played in the perfect timeslot – every summer night. Its standing among global T20 leagues is largely irrelevant to Aussie fans. As, frankly, is the IPL. It is also a mistake to think the IPL is better-run. It simply operates in a far bigger market. Which brings us to cricket politics. The argument for: Key figures are in favour of it. The 'privatise' faction has existed in Australian cricket since at least 2011. However, its incentives must be carefully examined. If I am a leading player, player agent, or players' union, I want as much competition for players as possible – except when it comes to restrictions on overseas player slots in the BBL. More owners and more competitions are better. So privatisation is good. CA's incentives are the opposite. If I am associated with a potential investor or stand to make money from a transaction, I want privatisation. CA needs to discount these perspectives accordingly. Loading And if I am an executive or director who wants to be seen to 'do something', or 'leave a legacy', or just do something new, I might want privatisation. That requires a good hard look in the mirror. Administrators are only temporary custodians of the game. The real question for CA is what is best for Australian cricket fans, and the grassroots clubs and associations that ultimately own the game. Publicising the report would help us decide for ourselves. That is the right next step.
