Election 2025: Labor shifts gears in drive to revive productivity

Jim Chalmers has committed a second-term Albanese government to shifting its three-year fight against inflation towards reversing flatlining productivity.

Treasurer Jim Chalmers, right, and his opposition counterpart Angus Taylor before Wednesday’s debate. Picture: NewsWire/ David Crosling

You can now listen to The Australian's articles. Give us your feedback.

You can now listen to The Australian's articles.

Jim Chalmers has committed a second-term Albanese government to shifting its three-year fight against inflation towards reversing flatlining productivity, amid business fears about weak economic growth, Labor’s industrial ­relations laws, red tape and high taxes.

After the International Monetary Fund this week slashed its GDP projections for Australia, the Treasurer on Wednesday pledged that a re-elected Labor government would heed the call of business leaders and pull policy levers to lift productivity.

With productivity slumping 1.2 per cent in the year to December and average productivity growth over the past decade hitting its lowest levels in 60 years, Dr Chalmers is promising a ­government-wide response to boost efficiency and economic growth.

Writing in The Australian, he said: “Our vision for a second term is rebuilding incomes, reinforcing resilience and boosting produc­t­ivity to ensure Australia remains an island of opportunity and ­stability in a sea of global ­uncertainty”.

As price pressures ease and the Reserve Bank considers rate cuts amid rising global uncertainty fuelled by Donald Trump’s trade wars, Dr Chalmers said “our second term will focus on productivity, without forgetting inflation”.

The Productivity Commission is due to provide recommen­dations to government on boosting productivity later this year.

“We know business conditions are difficult and our economy, like almost every other advanced economy, is not productive enough. This problem didn’t show up a few years ago, it has been with us for two decades,” Dr Chalmers wrote.

In his third campaign debate with opposition Treasury spokesman Angus Taylor, hosted by the Business Council of Australia and Council of Small Business Organisations Australia, Dr Chalmers said it would “take us some time to turn around” weak productivity.

In front of small business owners and chief executives including Rio Tinto Australia CEO Kellie Parker, HSBC Australia chief Tony Shaw and Australian Unity managing director Rohan Mead, Dr Chalmers defended Labor’s sweeping industrial relations reforms and flagged further action targeting gender equality, modern awards and non-compete clauses.

Mr Taylor said bolstering business investment would be crucial to the Coalition’s plan to drive productivity gains, spruiking the ­ establishment of a new body – Investment Australia – that would fast-track approvals and streamline co-ordination across government agencies.

“We’re seeing regulatory overreach in this country; it’s holding back investment, it’s holding back productivity and the prosperity of all Australians,” he said.

Dr Chalmers is expected to release Labor’s final election costings before the weekend to heap pressure on Mr Taylor, who will not unveil the Coalition’s list of savings and deficit forecasts until next week.

With Labor’s deficit and debt projections expected to be similar to those in the March 25 budget and Pre-election and Economic and Fiscal Outlook, the Coalition will not release its costings until days out from polling day.

Peter Dutton on Wednesday renewed the Coalition commitment to scrap Labor’s $20bn Rewiring the Nation fund, $10bn Housing Australia Future Fund and $14bn production tax credits scheme and not proceed with the government’s $16bn write-off of HELP university debt.

The Opposition Leader, who would also cancel the commonwealth’s share of the $200bn Suburban Rail Loop project and clampdown on the size of the public service, also said he would axe Labor’s electric car subsidies, backflipping on a previous commitment to retain it.

With the Coalition still backing billions earmarked within these existing programs – and many savings dependent on Senate approval – their ability to reclaim much of the funding appears seriously constrained.

Following the economic election debate in Melbourne, industry leaders remained sceptical about Labor’s commitment to turbocharge productivity.

COSBOA chief executive Luke Achterstraat said productivity was in dire straits. “Productivity in Australia has ground to a halt. Businesses just don’t have the money to re­invest and innovate,” he told The Australian.

“So far, neither party has presented a coherent vision for the significant taxation and regulatory reform Australia’s small business community sorely requires to boost productivity and drive growth. A cut to the small business company tax rate would increase confidence which would, in turn, enhance spending.”

BCA chief executive Bran Black said “our average productivity growth over the last decade was the lowest in six decades, and it’s declined 1.2 per cent over the past year”.

“Productivity growth and real wages growth is symbiotic, and that makes the linkage between productivity growth and our collective national prosperity iron-clad. Both major parties can speak to their policies implemented or proposed which have increased or which would increase national productivity,” Mr Black said.

“At the same time, both parties have implemented or proposed policies that disincentivise investment and make it harder to run a business.”

Ahead of the May 20 RBA board meeting, the first following the election, RBA governor Michele Bullock on Thursday will speak at a summit in Washington DC, where central bank governors and economic ministers from around the globe have gathered for G20, IMF and World Bank meetings.

Treasury deputy secretary Katrina Di Marco, who heads the department’s international and foreign investment group, has also travelled to the US for the meetings.

In his opinion piece, Dr Chalmers said “escalating trade tensions threaten the fourth major shock to the global economy in less than two decades”.

“First, the global financial crisis delivered a demand shock; then the pandemic a health shock that up-ended supply; followed by a spike in global inflation; and now, a trade war,” he wrote.