Latest news with #Economic Reform Roundtable
Daily Mail
18 hours ago
- Business
- Daily Mail
Brutal cost-of-living warning that will impact every Australian: 'The system is broken'
Deliveries from popular online retailers like Mecca, ASOS, and The Iconic are set to become more expensive and slower if the Federal Government backs a new fuel tax. Proposals expected to be discussed at the Economic Reform Roundtable on Wednesday and Thursday could result in retailers passing on higher fuel costs directly to customers, potentially making free shipping a thing of the past. Cheaper, slower delivery options could become the new normal, leaving Australians weighing whether to pay extra for faster service. Currently, heavy freight trucks enjoy a fuel tax rebate that keeps delivery costs down and helps packages arrive quickly. Farmers and freight operators claim back part of the fuel tax they pay, the same rebate that has historically made online deliveries cheaper and faster. A new levy would reverse that advantage. The tax push has been supported by teal independents Kate Chaney, Allegra Spender, and Senator David Pocock, with Spender attending the roundtable discussions. The Productivity Commission, which spoke at the roundtable on Wednesday, is expected to recommend a higher fuel tax for heavy vehicles delivering goods across the country. On Thursday, Grattan Institute CEO Aruna Sathanapally will present to the group, with her organisation having previously expressed support for the tax. Meanwhile, the Greens, who hold significant influence in the Senate, are also backing the proposal. If implemented, the fuel tax could add up to 20.3 cents per litre on diesel and petrol for trucks, an 11 per cent increase based on last year's average fuel price of 181 cents per litre. Australia Post already charges a fuel levy for deliveries, with express services attracting up to 16.3 per cent and regular post 5.6 per cent. Any increase could see delivery times slow or costs rise further. Retailers may respond by raising free shipping thresholds or passing the extra costs directly to consumers, affecting everything from skincare to sneakers. Currently, heavy vehicles used on public roads receive a 20.3 cent per litre rebate for diesel and petrol, including E10, B5, and B20 blends with ethanol and biodiesel. Off-road fuel rebates are even higher, reaching up to 48.8 cents per litre between August 2023 and February 2024. National Road Association (NATRoad) CEO Warren Clark told Daily Mail the change would hurt the trucking and freight industry. 'The fuel tax system is broken and needs to be revamped. Measures like this will simply add to the increasing stress felt by the industry and we'll continue to see businesses being forced into administration' he said. 'More importantly, it would increase the cost of living which will hurt everyone.' He warned it would hurt families already dealing with cost-of-living. 'An increase in fuel tax at this time would be devastating for operators already struggling with rising costs and wafer-thin margins.' he said. 'The road freight sector has been under serious pressure for some time, with rising costs and no real productivity gains in the last decade. A reversal of these benefits could ripple through the delivery system and into shoppers' wallets.' The three-day roundtable will conclude on Thursday.
ABC News
2 days ago
- Business
- ABC News
Off the productivity round table: What won't be discussed this week
Problem and productivity. It's a pairing that has become inseparable in recent times, given our productivity growth is the lowest in half a century. It'll also be a major point of discussion at the Economic Reform Roundtable that kicked off in Canberra this week. For a while, it appeared the entire forum would be devoted to the topic with our best and brightest assembled to nut out a way to address it. But solutions generally can only be found if we truly understand the root cause of the problem. And that's where things go horribly wrong when it comes to any discussion around labour productivity. A seemingly simple concept — the amount of product produced over a given period of time by the same amount of labour — understanding what drives it can be complex and prone to misinterpretation. And that's before you consider the difficulties in even measuring labour productivity, particularly in an economy such as ours where the vast bulk of workers, instead of churning out easily countable widgets, are providing services to other people. Professor Roy Green from the University of Technology points to Australian manufacturing's demise — which now accounts for just 6 per cent of our GDP — as a major contributor to our productivity conundrum. There is, he says, "an almost exact correlation between the decline of manufacturing, the decline of business expenditure on research and development and the decline of productivity growth, now at its lowest level in almost 60 years". And then there are factors that are totally off the agenda. For such a pointy headed topic, finding answers often involve traversing areas that are socially, culturally and politically explosive. In many cases, economists — fearing a community backlash — refuse to even mention some of the more obvious topics that have a legitimate bearing on productivity. That involves two other P-words: population and property. Many business leaders and most politicians confuse productivity with profitability. There's a common misconception that, if only we could keep wages in check, our labour productivity problems could fix themselves. True, there's a link between wages and how much we produce but, even then, it's not completely understood. If lower wages were the key to better productivity, company executives should have penalties imposed for underperformance rather than bonuses for turning up. Reserve Bank governor Michele Bullock lamented last week's decision to downgrade its labour productivity forecasts for the nation, a move that sent headline writers into a frenzy. Rising productivity, she said, lifts living standards as it provides the scope for workers to earn higher wages without putting pressure on inflation. But there's a catch. Businesses need to invest in new technology to help workers lift productivity. And they'll only do that if wages are rising, so they can reduce costs and boost profit. So, what comes first? Do higher wages lead to better productivity? Or does better productivity lead to higher wages? Just between us, no-one really knows. Luckly for the RBA governor, she declared it well and truly outside her remit. "All the Reserve Bank can do is make sure we have low and stable inflation, and if we have full employment, both of those things are very stable environments for businesses to think about how they might improve productivity, how they might produce more for the same amount of labour and capital input," she said. Once upon a time, there was no such thing as an automated carwash. You either did it yourself or paid people to do it by hand. When the first auto washing machine opened in Australia in 1968, it sparked what should have been a trend to lay waste to the old style, expensive hand washing. Cheaper and quicker, with minimal labour input, it's a perfect example of a productivity improvement. But in the past 20 years, there's been a resurgence in car hand washing operations. You'll find them everywhere, in shopping centre car parks and on highway corners. Why? Perhaps hand washing delivers a superior finish. But the biggest factor may well be that hand washing comes at a competitive price because labour costs are no longer prohibitive. Regardless of the reason, it's a negative for our productivity numbers. Sydney University academic Salvatore Babones penned an interesting piece in the Australian Financial Review this week, sheeting home the blame for our tardy performance in labour productivity to our surging population growth. Most new arrivals, he points out, are not highly skilled, nor are they permanent. "Massive influxes of low-skilled workers are obvious drivers of trends in labour productivity," he wrote. "But they're not even mentioned in recent Reserve Bank of Australia and Productivity Commission reports." Only around half the 1 million students — who make up about 10 per cent of the workforce — in Australia attend a university. The rest are in courses primarily designed to deliver a working visa. The huge influx has artificially kept GDP numbers elevated. But it's been at the expense of productivity. In those proportions, they act as a cheap source of labour which, when combined with a rigid wage setting system, maintains a lid on wages growth, and dampens the incentive for businesses to invest. "If you flood the labour market with low-skilled immigrants, real wages (adjusted for inflation) will fall, and productivity will decline as labour is used less efficiently," he wrote. "It's that simple." As Babones points out, Australia may look down on other countries that exploit cheap, imported labour. But we do the same, under the guise of education visas. As they hunker down in working groups in the national capital this week, the dominant topic for conversation will be tax. There'll be furious debate about cutting the corporate tax rate and increasing the GST. But there is no guarantee either of those measures will lead to increased business investment or improve productivity. That's because businesses that earn bigger profits don't automatically invest the windfall gains. Most of the time they hand it back to shareholders, or at least a large slab of it. Our productivity may be among the worst in the developed world and our business investment woeful. But there is one area where Australians exceed on the investment front. Our obsession with real estate has resulted in a deluge of cash directed into housing. It's why our real estate is so horrifyingly expensive. According to the Australian Prudential Regulation Authority, as a nation we are in hock to the tune of $2.3 trillion on property mortgages. And that's expected to rise as interest rates ease. More than 2.26 million Australians own an investment property, largely because of favourable tax policies that deliberately direct investment into real estate. It may be a radical idea but altering some of those tax policies, such as negative gearing and the capital gains tax discount, might have two beneficial impacts. It may lead to more affordable housing in the future. And it might result in resources being better allocated to more productive means. Just don't mention it in Canberra this week.
News.com.au
4 days ago
- Business
- News.com.au
Hunger for growth ‘missing' from economic policy, productivity tsar says
Decision makers must adopt a 'growth mindset' to fix the productivity problem plaguing the economy, according to Australia's productivity tsar. 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.' 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. 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'. 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.'
