Jim Chalmers’ roundtable must deliver real reform to fix productivity crisis

Jim Chalmers. Picture: NewsWire / Martin Ollman

Jim Chalmers can walk out of next week’s economic reform roundtable with four key outcomes that would lift Australia’s dire productivity levels.

As the Reserve Bank warns about weak productivity dragging down living standards and wages, the Treasurer must secure clear reform actions at the three-day roundtable despite Anthony ­Albanese talking it down.

When Chalmers stands up next Thursday night and updates the nation on how productive his roundtable has been, there are policy ideas that have near-unanimous support across the private sector and state governments.

Given the Prime Minister has rejected major taxation reform, the priorities should be cutting red tape faster by turbocharging the government’s national productivity fund, fast-tracking a road-user charge, staring down unions on unleashing practical ­artificial intelligence applications and making ballooning bureaucracies more productive. After the RBA slashed near-term assumptions for productivity growth, Chalmers is correct to say weak productivity has been “baked-in” to Australia’s economy for decades. There are no overnight fixes for this challenge.

Reserve Bank governor Michele Bullock in Sydney on Tuesday. Picture: AFP

But there are levers that can ­remove regulatory barriers and investment blocks holding back the private sector.

In November last year, Chalmers announced a $900m national productivity fund incentivising states and territories to cut red tape, boost competition and speed up home construction and Labor’s clean energy agenda.

Business leaders and state governments believe that figure should be billions of dollars higher to accelerate meaningful productivity reforms.

A road-user charge would ­ensure all motorists, including EV drivers, pay for transport infrastructure. The current system imposing a bowser tax only on petrol and diesel vehicles is unsustainable, with fuel excise projected to plunge and drive a hole in road funding.

Unless Australia keeps pace with AI adoption, which would make some jobs redundant, the nation will struggle to remain competitive. And if governments don’t make their public service ­armies more productive, the aim of reducing the country’s regulatory nightmare will fail.

RBA governor Michele Bullock seemed a bit miffed she was getting asked questions about productivity at her press conference on Tuesday, despite the central bank’s statement on monetary policy name-checking productivity 297 times.

A third rate cut in six months, with another one expected by ­December, is great news for mortgage holders. Unemployment remaining historically low is also good. However, weak productivity and economic growth are poor outcomes for Australia in a volatile world.

The RBA monetary policy board chaired by Bullock, who will deliver a “some perspectives on productivity trends” presentation at the roundtable meetings next Tuesday, said “wages growth has eased from its peak but productivity growth has not picked up”. The central bank also ­acknowledged its own productivity forecasts have “over-­estimated” growth.

“Consistently weaker than ­expected productivity growth has led us to revise down our productivity assumption … our forecasts have implicitly assumed that productivity growth was temporarily weak and would gradually return to, and be sustained at, higher historical growth rates,” the RBA said.

After the forecasting shocker during the pandemic, we can only hope the RBA and Treasury ­forecasters are getting their numbers right.