Australia would suffer ‘a twilight era of economic lethargy’ if the PC report gathers dust
Business leaders fear that if the latest Productivity Commission report is ignored the nation will slip into economic lethargy.
Big business has warned the federal government not to allow yet another Productivity Commission report on the ills plaguing the Australian economy – and the recommended panacea – go unanswered.
They say the nation risks falling into “a twilight era of economic lethargy” if the report is left to gather dust in a bottom draw.
Armed with the 1000-page “Advancing Prosperity” report released on Friday as part of the Commission’s five-year Productivity Inquiry, the business community fears that the country will suffer from lower standards of living if the report’s stark warnings go unheeded.
The Australian Chamber of Commerce and Industry said the report should serve as a “wake-up call” of the dangers of handballing the hard tasks of real reform to subsequent generations.
ACCI chief executive Andrew McKellar said that if Australia remained on its current trajectory and failed to kickstart productivity growth, future incomes would be 40 per cent lower, and the working week five per cent longer.
“We simply cannot allow that to happen. Australia has slipped behind other nations, down 10 places in the OECD’s productivity rankings in the five decades to 2020. It’s time to arrest that trend,” Mr McKellar said.
“Lifting productivity is the only way we will be able to afford the healthcare, education and disability support programs that Australians expect. And it’s the only pathway to being able to pay for the AUKUS program announced this week.”
He said Australia needed to get back on a path of strong productivity growth to sustain a high level of economic activity over the long term. This could be captured, he added, by removing impediments, and better incentivising individuals and businesses to be innovative and invest.
For the ACCI this meant significant attention given to the task of tax reform.
“Tax reform is fundamental. Australian businesses need a tax system that delivers the right mix of incentives that will make them globally competitive, stimulate investment in research and development, and support them in becoming more efficient and productive,” Mr McKellar said.
“The regulatory system must make it easy for businesses to establish, operate and grow in a dynamic, technology driven economy. The primary aim must be on fit-for-purpose regulation that is simple and outcome focused, rather than complicated and prescriptive.
“We endorse the Productivity Commission’s call for better teaching and innovation in the education sector, and a more effective use of skilled migration.
“All this needs to occur amid a background of achieving net zero carbon emissions and the energy challenges that brings. This is a moment to be seized so we can leave subsequent generations a better Australia.”
Business Council chief executive Jennifer Westacott said Australia couldn’t afford to leave yet another Productivity Commission inquiry report gathering dust in the national bottom drawer.
“Productivity is more than a buzzword; it plays out in the real world and Australians are living the consequences of more than a decade of slowing productivity growth right now,” she said.
“Productivity isn’t about working harder for less. Building a more productive economy means driving the investment that lets technology cut down on the hours nurses spend doing paperwork or building new infrastructure that gets more products to lucrative export markets faster and more efficiently.”
Ms Westacott said the Commission was right to target the key areas for action when it came to workforce adaptability, the need to better harness data and technology, decarbonising at least cost, building a more dynamic economy and reforming the non-market sector to deliver better services at lower cost.
“There are two ingredients to fixing Australia’s productivity problem, government action and private investment. To deliver for Australians we have to get the settings right to unleash private sector balance sheets, attract new investment and drive innovation.
“Productivity is about creating more value by doing things differently, by using new technology, putting improved systems in place and doing processes in new ways.
“Reform isn’t easy and businesses are ready to work with government to build the more productive economy that delivers for Australians.”
She said the report would take time to work through, but was a critical blueprint for a more dynamic and productive economy that could deliver the living standards and opportunities Australians expected.
“Today’s landmark report by the Productivity Commission lays out a difficult but critical path out of the low income growth state of Australia’s economy,” said Innes Willox, chief executive of the national employer association Ai Group, who called on a “detailed and constructive response” by the federal government.
“Ai Group, on behalf of our members, is keen to engage in addressing the barriers and creating the opportunities set out in the report. The challenges presented by the imperative to reach net zero emissions while also striving for a sustainable uplift in living standards are imposing. Yet we have little choice but to recognise and overcome the role that low productivity growth has played and continues to play in limiting our ability to meet these challenges.
“We urge the federal government to redouble its determination to pursue a positive skills agenda while also picking up on the Commission’s other recommendations to lift our performance,” Mr Willox said.
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