'Trade-offs' on cards to get productivity back on track
Productivity Commission chair Danielle Wood is calling on Australia to adopt a "growth mindset" to prioritise economic outcomes and boost living standards.
That means changing corporate taxes to promote investment, simplifying regulations, speeding up housing and energy approvals and ensuring AI adoption is not undermined by unnecessary regulation, among other suggestions.
It comes as the commission prepares to release a series of reports detailing how Australia can get productivity moving again.
"Australia should be a place where children born today can expect to live better and more prosperous lives than the generations who have come before them,'' Ms Wood said.
"Productivity growth is essential to fulfilling that promise."
But productivity growth has plummeted in recent years.
How much Australia produces with the same amount of workers has grown at just under 0.4 per cent per year since 2015, compared with the 60-year average of 1.6 per cent.
That's been caused in part by governments ignoring or minimising economic growth when making policy choices in recent years, according to a paper released by the commission.
Policymakers have made it harder that it should be to start a business or build essential infrastructure such as housing or renewable energy because they have failed to weigh trade-offs effectively, been too risk-averse or "overly influenced by vocal stakeholder groups".
Governments must balance competing objectives and make choices that improve Australians' overall wellbeing, even if those decisions might negatively affect other goals.
"Bringing a growth mindset to policy decisions means elevating economic growth and its benefits,'' Ms Wood said.
"That doesn't mean policymakers should ignore other objectives, but it does mean being clear-eyed about the trade-offs."
The paper lays the groundwork for five forthcoming reports the commission is preparing to release before an economic roundtable convened by Treasurer Jim Chalmers.
He said the report made clear the productivity problem had been around for decades and almost every comparable country had the same challenge.
"The best way to strengthen our economy and make it more productive is to work through the issues in a methodical and considered way in collaboration with business, unions and the broader community," Dr Chalmers said.
In its submission to the roundtable, a joint group of industry associations including the Business Council of Australia and the Australian Chamber of Commerce and Industry outlined four priority areas for reform.
They include reforming research and development funding models to boost innovation; cutting the regulatory burden by 25 per cent by 2030; co-ordinating and unifying planning processes to speed up project approvals; and committing to comprehensive tax reform.
"We need to cut unhelpful red tape, streamline planning, fix the tax system and improve incentives for investment," Business Council chief executive Bran Black said.
"These policies can deliver benefits for economic activity across the whole country and importantly ensure future generations aren't worse off."
Australians are being warned to prepare for trade-offs in areas such as housing if the nation's productivity push is to be successful.
Productivity Commission chair Danielle Wood is calling on Australia to adopt a "growth mindset" to prioritise economic outcomes and boost living standards.
That means changing corporate taxes to promote investment, simplifying regulations, speeding up housing and energy approvals and ensuring AI adoption is not undermined by unnecessary regulation, among other suggestions.
It comes as the commission prepares to release a series of reports detailing how Australia can get productivity moving again.
"Australia should be a place where children born today can expect to live better and more prosperous lives than the generations who have come before them,'' Ms Wood said.
"Productivity growth is essential to fulfilling that promise."
But productivity growth has plummeted in recent years.
How much Australia produces with the same amount of workers has grown at just under 0.4 per cent per year since 2015, compared with the 60-year average of 1.6 per cent.
That's been caused in part by governments ignoring or minimising economic growth when making policy choices in recent years, according to a paper released by the commission.
Policymakers have made it harder that it should be to start a business or build essential infrastructure such as housing or renewable energy because they have failed to weigh trade-offs effectively, been too risk-averse or "overly influenced by vocal stakeholder groups".
Governments must balance competing objectives and make choices that improve Australians' overall wellbeing, even if those decisions might negatively affect other goals.
"Bringing a growth mindset to policy decisions means elevating economic growth and its benefits,'' Ms Wood said.
"That doesn't mean policymakers should ignore other objectives, but it does mean being clear-eyed about the trade-offs."
The paper lays the groundwork for five forthcoming reports the commission is preparing to release before an economic roundtable convened by Treasurer Jim Chalmers.
He said the report made clear the productivity problem had been around for decades and almost every comparable country had the same challenge.
"The best way to strengthen our economy and make it more productive is to work through the issues in a methodical and considered way in collaboration with business, unions and the broader community," Dr Chalmers said.
In its submission to the roundtable, a joint group of industry associations including the Business Council of Australia and the Australian Chamber of Commerce and Industry outlined four priority areas for reform.
They include reforming research and development funding models to boost innovation; cutting the regulatory burden by 25 per cent by 2030; co-ordinating and unifying planning processes to speed up project approvals; and committing to comprehensive tax reform.
"We need to cut unhelpful red tape, streamline planning, fix the tax system and improve incentives for investment," Business Council chief executive Bran Black said.
"These policies can deliver benefits for economic activity across the whole country and importantly ensure future generations aren't worse off."
Australians are being warned to prepare for trade-offs in areas such as housing if the nation's productivity push is to be successful.
Productivity Commission chair Danielle Wood is calling on Australia to adopt a "growth mindset" to prioritise economic outcomes and boost living standards.
That means changing corporate taxes to promote investment, simplifying regulations, speeding up housing and energy approvals and ensuring AI adoption is not undermined by unnecessary regulation, among other suggestions.
It comes as the commission prepares to release a series of reports detailing how Australia can get productivity moving again.
"Australia should be a place where children born today can expect to live better and more prosperous lives than the generations who have come before them,'' Ms Wood said.
"Productivity growth is essential to fulfilling that promise."
But productivity growth has plummeted in recent years.
How much Australia produces with the same amount of workers has grown at just under 0.4 per cent per year since 2015, compared with the 60-year average of 1.6 per cent.
That's been caused in part by governments ignoring or minimising economic growth when making policy choices in recent years, according to a paper released by the commission.
Policymakers have made it harder that it should be to start a business or build essential infrastructure such as housing or renewable energy because they have failed to weigh trade-offs effectively, been too risk-averse or "overly influenced by vocal stakeholder groups".
Governments must balance competing objectives and make choices that improve Australians' overall wellbeing, even if those decisions might negatively affect other goals.
"Bringing a growth mindset to policy decisions means elevating economic growth and its benefits,'' Ms Wood said.
"That doesn't mean policymakers should ignore other objectives, but it does mean being clear-eyed about the trade-offs."
The paper lays the groundwork for five forthcoming reports the commission is preparing to release before an economic roundtable convened by Treasurer Jim Chalmers.
He said the report made clear the productivity problem had been around for decades and almost every comparable country had the same challenge.
"The best way to strengthen our economy and make it more productive is to work through the issues in a methodical and considered way in collaboration with business, unions and the broader community," Dr Chalmers said.
In its submission to the roundtable, a joint group of industry associations including the Business Council of Australia and the Australian Chamber of Commerce and Industry outlined four priority areas for reform.
They include reforming research and development funding models to boost innovation; cutting the regulatory burden by 25 per cent by 2030; co-ordinating and unifying planning processes to speed up project approvals; and committing to comprehensive tax reform.
"We need to cut unhelpful red tape, streamline planning, fix the tax system and improve incentives for investment," Business Council chief executive Bran Black said.
"These policies can deliver benefits for economic activity across the whole country and importantly ensure future generations aren't worse off."
Australians are being warned to prepare for trade-offs in areas such as housing if the nation's productivity push is to be successful.
Productivity Commission chair Danielle Wood is calling on Australia to adopt a "growth mindset" to prioritise economic outcomes and boost living standards.
That means changing corporate taxes to promote investment, simplifying regulations, speeding up housing and energy approvals and ensuring AI adoption is not undermined by unnecessary regulation, among other suggestions.
It comes as the commission prepares to release a series of reports detailing how Australia can get productivity moving again.
"Australia should be a place where children born today can expect to live better and more prosperous lives than the generations who have come before them,'' Ms Wood said.
"Productivity growth is essential to fulfilling that promise."
But productivity growth has plummeted in recent years.
How much Australia produces with the same amount of workers has grown at just under 0.4 per cent per year since 2015, compared with the 60-year average of 1.6 per cent.
That's been caused in part by governments ignoring or minimising economic growth when making policy choices in recent years, according to a paper released by the commission.
Policymakers have made it harder that it should be to start a business or build essential infrastructure such as housing or renewable energy because they have failed to weigh trade-offs effectively, been too risk-averse or "overly influenced by vocal stakeholder groups".
Governments must balance competing objectives and make choices that improve Australians' overall wellbeing, even if those decisions might negatively affect other goals.
"Bringing a growth mindset to policy decisions means elevating economic growth and its benefits,'' Ms Wood said.
"That doesn't mean policymakers should ignore other objectives, but it does mean being clear-eyed about the trade-offs."
The paper lays the groundwork for five forthcoming reports the commission is preparing to release before an economic roundtable convened by Treasurer Jim Chalmers.
He said the report made clear the productivity problem had been around for decades and almost every comparable country had the same challenge.
"The best way to strengthen our economy and make it more productive is to work through the issues in a methodical and considered way in collaboration with business, unions and the broader community," Dr Chalmers said.
In its submission to the roundtable, a joint group of industry associations including the Business Council of Australia and the Australian Chamber of Commerce and Industry outlined four priority areas for reform.
They include reforming research and development funding models to boost innovation; cutting the regulatory burden by 25 per cent by 2030; co-ordinating and unifying planning processes to speed up project approvals; and committing to comprehensive tax reform.
"We need to cut unhelpful red tape, streamline planning, fix the tax system and improve incentives for investment," Business Council chief executive Bran Black said.
"These policies can deliver benefits for economic activity across the whole country and importantly ensure future generations aren't worse off."
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For those who doubt the effect of these changes, go and ask the populations of our AUKUS partners, Britain and the United States, how their health and retirement systems are going. The motivation behind the Accord was the labour movement's resolve to never repeat the errors that had contributed to the swift downfall of the Whitlam government: chiefly the lack of co-ordination between the unions and the party, and the failure to understand the implications of rampant wage claims made as the economy was suffering a shock from oil prices. In other words, the movement had to learn from its mistakes. In the 80 years since the end of World War II, the Labor Party has been elected to office from opposition only four times. Two of those governments – one headed by Gough Whitlam, the other by Kevin Rudd (twice) and Julia Gillard – went down the chute after just two terms. Both experienced sustained periods of internal chaos and failed to live up to their promise. The Hawke-Keating government is the standout success in the entire history of the ALP. It's still early days for the Albanese government, which is now in what was for the Whitlam and Rudd-Gillard outfits the death zone of a second term, but its early defenestration looks unlikely. A record lower house majority and a slide in the fortunes of the Liberals and the Greens offer the prospect of a sustained incumbency. The Albanese government is writing its own electoral script. The common experience of new governments from the early 1980s was that they were elected with a substantial majority that was reduced at the next election. Under Albanese, it has worked the other way around, with Labor just getting over the line in 2022 and then securing a landslide second time up. Right now, it is governing from an incredibly strong position. How could the government blow it? By not seizing the opportunity it's been given by the 8,553,231 Australians who voted for it. 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The Hawke-Keating government is the standout success in the entire history of the ALP. It's still early days for the Albanese government, which is now in what was for the Whitlam and Rudd-Gillard outfits the death zone of a second term, but its early defenestration looks unlikely. A record lower house majority and a slide in the fortunes of the Liberals and the Greens offer the prospect of a sustained incumbency. The Albanese government is writing its own electoral script. The common experience of new governments from the early 1980s was that they were elected with a substantial majority that was reduced at the next election. Under Albanese, it has worked the other way around, with Labor just getting over the line in 2022 and then securing a landslide second time up. Right now, it is governing from an incredibly strong position. How could the government blow it? By not seizing the opportunity it's been given by the 8,553,231 Australians who voted for it. 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In any event, in a period when the care economy – a sector in which productivity is naturally difficult to measure – is big and guaranteed to grow, and artificial intelligence is poised to revolutionise most aspects of work, what will become of the existing concept of productivity? It follows that if a meeting convened by the national government has economic reform in its title, it needs to generate substantial results. The smartest thing the government can do will be to see the roundtable as an opportunity to expand its policy options, regardless of whether the industry groups or any other stakeholders play a spoiler role or not. If it tries to 'manage' the outcome, it will be shooting itself in the foot and letting down the people who gave it power. Chalmers, as a former staffer of Wayne Swan, treasurer in the Rudd and Gillard governments, will recall what happened to the 2010 Henry review of the tax system commissioned by the Rudd government. The review made 138 recommendations, only three of which the government took up. It was a political and policy disaster. And having studied Paul Keating's political career, Chalmers also knows about the ambitious and far-reaching tax changes Keating introduced in the Hawke government's second term. At the 1984 election, Labor pledged to hold a tax summit if re-elected. After the summit in 1985, Keating cut the marginal tax rate from 60 to 49 per cent and introduced a tax on capital gains and fringe benefits, along with a range of other changes to such things as wholesale sales tax and the company tax rate. Several measures, especially the fringe benefits tax, faced serious pushback from vested interests. The government had no direct mandate for those outcomes, but it pushed ahead and got them through. It was rewarded by voters for its courage, winning in 1987, 1990 and 1993. The roundtable could turn out to be a bust, as some critics have predicted, but that shouldn't matter. If it founders on the rock of self-interested pandering or head-in-the-sand behaviour, Albanese should say it was worth a try, thank the participants for coming, and then get on with doing big things anyway. There is an appetite for this in the community, especially among younger voters, who are getting the rough end of the economic pineapple. Loading A report this week found that house prices are 14 times the annual average wage. To let this continue would be unconscionable and a social catastrophe. The prime minister and treasurer are breathing rare air. They will never get a chance like this again. Then again, who's to say they actually share any historically significant, politically risky ideas for the economy? Postscript: What of my massive career-defining national scoop in 1983? Four paragraphs appeared in a late edition on a left-hand page deep inside the paper, with no byline. 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