Treasurer Jim Chalmers announces $900m National Fund to boost lagging productivity

The new $900m fund will pitch state against state in an effort to boost Australia’s sagging productivity levels.

States will be asked to compete for a share of a $900m fund to boost competition and economic activity in the federal government’s latest play to improve productivity which has been on the decline since the pandemic.

Federal Treasurer Jim Chalmers will announce a National Productivity Fund on Wednesday in a speech to the Australian Business Economists in Sydney, where he will acknowledge that productivity growth over the last full decade had been the lowest in 60 years.

The policy will allow states and territories to access funding from a “menu” of approved projects.

That could include funding to help streamline commercial planning and zoning provisions, or making it easier for developers to use modern construction methods.

Both tactics could boost housing supply and supercharge the building industry which has been hit by labour shortages and the increased cost of materials.

Treasurer Jim Chalmers will announce a new $900m fund to help states boost productivity. Picture: NewsWire/ Martin Ollman

“This will incentivise states to achieve productivity gains through pro-competitive policies, choosing from a menu of options,” the Treasurer will say.

“It’s all about rewarding states with more revenue, where they deliver meaningful and measurable economic reforms.”

Mr Chalmers will also flag increasing competition as a key priority, with Treasury currently reforming the National Competition Policy that was handed to the government earlier this month.

The reports says reforming Australia’s competition sectors could boost GDP by up to $45bn a year, or about $5000 per household every year, and reduce prices by 1.45 per cent.

It’s expected two policies which will be prioritised will include “the adoption of trusted international product safety standards and developing a general right to repair”.

“More competition means a more productive and more dynamic economy, with better jobs, more choices and growth, and fairer prices,” Mr Chalmers will say.

Reserve Bank governor Michele Bullock has been critical of Australia’s slow productivity, saying it’s directly correlated with improving living standards for Australians.

“It grows the pie so there’s more of it to share around, and it’s important for inflation in the sense that if we’re not getting productivity growth then that limits how far wages can rise or how quickly wages can rise without causing inflation,” she said in November.

“So it has implications for wage rises for people. That’s why it’s important.”

Originally published as Treasurer Jim Chalmers announces $900m National Fund to boost lagging productivity