Modest outcomes, time for the rubber to hit the road

Abolishing hundreds of nuisance tariffs, a road-user charge, and cutting red tape clutter on housing approvals are worthwhile outcomes from the productivity roundtable. So is the move to fast-track Environment Protection and Biodiversity Conservation approvals, though that must apply to mining, energy and industrial projects as much as wind and solar farms carpeting the countryside.

These and other areas of agreement at the roundtable should be the routine bread-and-butter work of governments and not require a special event to be acted upon. But Jim Chalmers is right to involve his cabinet colleagues and their state counterparts in the process of implementing reforms.

After the final session, Matthew Cranston asked Productivity Commission chair Danielle Wood if the roundtable would get productivity in Australia back to a 1.2 per cent growth target. Ms Wood, who led one of the key sessions, said there had been “a lot of progress” but she was doubtful it was enough to restore productivity to where it should be. “I wouldn’t go that far,” she said. “But it was at least pro-growth, which is a good thing.”

Unlike the Prices and Incomes Accord of 40 years ago, in which workplace relations and trade-offs between workers and employers were front and centre, to the advantage of both for decades to come, industrial relations barely rated a mention around the table, judging by the reports.

Given the close links between labour productivity, wage increases and living standards, it cannot languish in the “too hard” basket indefinitely. It is encouraging, however, that unlike the government’s 2022 Jobs and Skills Summit, business groups agree that the roundtable was a constructive process for priority areas for reform. As Business Council of Australia chief executive Bran Black said: “It’s time for the rubber to hit the road.”

The exercise has been useful in focusing stakeholders’ minds, and hopefully public attention, on home truths that need to be faced. Treasury expects that current government spending as a percentage of GDP, outside the Covid stimulus, will hit the highest level since 1986 at 27 per cent of GDP in 2025-26.

And as the Treasurer said before the third day of the roundtable, seven “big, intensifying pressures” on the nation’s budget need to be addressed. Five of these are in the care economy, another is interest costs (which underlines the importance of budget sustainability and paying down the nation’s debt as soon as possible), and the other is defence.

In Australia’s current strategic circumstances, amid international consensus when comparable countries are lifting defence spending to at least 3.5 per cent of GDP, as called for by our major ally, the US, it is an area where increased outlays to secure the nation’s security are essential.

The fact that five of the seven main budget pressures are in the care economy underlines the value of Wednesday’s announcement by Health and NDIS Minister Mark Butler that children with mild developmental delays, including autism, will be diverted from the $46bn-a-year program from 2027 to cut growth in the scheme to 4-6 per cent a year.

The decision was the most important of the government’s second term to date. It will help make the program sustainable. Sensible action in other arms of the care economy is vital.

After years of argument about tax reform, including the Henry review, it is no surprise the gathering produced no agreement on the way forward, although the ACTU’s push for higher taxes shows the unions have lost the plot.

Dr Chalmers ruled out a “lengthy, public, external review”, which is a relief. Labor will develop its own proposals, he said, built around three objectives: a fair go for working people; an affordable, responsible way to incentivise business investment: and making the tax system more sustainable.