Agency chief's solution to economy woes
Labor's highly anticipated Economic Reform Roundtable will kick off on Tuesday, bringing together 'a range of people with a range of views', as described by Anthony Albanese.
The point of getting unions, business leaders, and policy experts in the same room as politicians is building consensus on how to boost productivity, or how efficiently an economy produces goods and services.
Productivity Commission (PC) chair Danielle Wood will use a major speech on Monday to call on fellow roundtable attendees to be bold as they 'thrash out potential reforms to kickstart Australia's flagging productivity growth', warning that failure could bust the 'generational bargain' of handing over a better country to the future.
'I'm thrilled by the new appetite for economic reform that the roundtable has created over the past two months,' Ms Wood will tell the National Press Club, according to a copy of her speech seen by NewsWire.
'Ultimately the government will be judged on its actions and the outcomes they achieve.
'But it has taken an important step by recognising and pursuing economic growth, and the productivity that drives it, as a prime goal of policy.
'This 'growth mindset' – an elevation of growth and the benefits it brings – has been missing from Australian policy for far too long.' Productivity Commission chair Danielle Wood is calling for a 'growth mindset'. Aaron Francis / The Australian Credit: News Corp Australia
Faced with challenges posed by geopolitical turmoil, climate change and an ageing population, she will point out that young Australians do not believe they will have 'better lives than their parents'.
'The expectation that life will get better for each successive generation is Australia's generational bargain,' Ms Wood said.
'For many generations we have fulfilled its promise. Until, perhaps, this one.
'Overwhelmingly, young people today believe they won't live better lives than their parents did.
'As chair of the Productivity Commission, I'm worried too.'
She will note that the PC has already given the Albanese government some options.
Her agency released five reports over the past month zooming in on key areas, ranging from increasing economic agility and workforce training to harnessing artificial intelligence and the net zero transition.
On economic dynamism, the PC proposed reforming Australia's corporate tax system to encourage business investment, which has declined since the Global Financial Crisis.
It would cut the corporate tax rate for most businesses to 20 per cent and introduce a 5 per cent cashflow tax on all businesses, with a view to creating friendlier conditions for investors.
The result, according to Ms Wood, 'would increase investment by $7.4bn and GDP by $14.6bn'.
'Big enough to get out of bed for, I would think,' she will say.
Sky News Political Editor Andrew Clennell has commented on the Albanese government's upcoming economic roundtable. 'We know in terms of tax reform, GST and capital gains tax and negative gearing have already been ruled out by the PM,' Mr Clennell said. 'But there does seem to be consideration of a road user charge.'
On AI, the PC warned against a new overarching regulatory framework for AI and instead update existing regulations to address risks like fraud and discrimination.
'This would translate to an additional $116bn in economic activity – equivalent to boosting incomes for each Australian by $4300 a year over that period,' Ms Wood will say.
'A growth mindset means that we must not regulate our way out of this opportunity.'
Less regulation was an overarching theme in all the PC's reports.
Using those the reports as guides, Ms Wood will put forward three 'lessons about what a growth mindset looks like'.
'Regulate with growth in mind,' she will say, calling for 'leadership from the top when the policy sausage is being made'. The Albanese government's Economic Reform Roundtable will kick off on Tuesday. Martin Ollman / NewsWire Credit: News Corp Australia
In a nod to AI, she will say, 'Real growth comes from new ideas and technology,' arguing that productivity growth comes from new ideas, products, processes, and ways of managing people.
While physical inputs have limits, human ingenuity does not, Ms Wood will say.
Therefore, a growth mindset should focus on fostering innovation and enabling Australia to benefit from its own inventions and those of others.
Her final lesson is that productivity 'is a game of inches'.
'There is simply no single policy reform that can bring productivity growth back to its long-term average of 1.6 per cent,' Ms Wood will say.
'To shift the dial, governments will have to make a lot of pro-productivity decisions.'
Though, acknowledging the mammoth task, she will say she is 'optimistic that there is a package here that can make a difference to Australia's prosperity'.
'Governments must embed the importance of growth in every decision they make,' Ms Wood will say.
'This means engaging with trade-offs, better program delivery and design, and the 'boring but important work' of reducing administrative burden.
'We must ensure that governments pursue a growth agenda, for the benefit of businesses and workers today and, more importantly, for the generations to come.
'And that's worth a few days locked in a room.'
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