Productivity boost could make workers $14k better off

Changing company taxes, making it easier for Australians to upskill or change roles and embracing new technology are just a few of the ways we can all be better off, a new report finds.

Australians could be $14,000 better off if productivity gains got back to previous levels. Picture: NewsWire / Nikki Short

Australian full-time workers could be at least $14,000 better off over the next decade if the country embraces a few key changes.

A major new report from the Productivity Commission found Australians could be richer overall if the country overhauled company tax systems, embraced new technologies, invested in cheaper renewable energy, built a more skilled labour force and delivered quality care efficiently.

The latest ABS data shows multifactor productivity rose by just 0.1 per cent in 2023-2024.

The PC report, released on Thursday, concludes this is costing everyone.

Australians could be $14,000 better off if productivity gains got back to previous levels. Picture: NewsWire / Nikki Short

“If we could boost growth from its current level to its historic average, adult Australian full-time workers would be at least $14,000 a year better off by 2035,” Productivity Commissioner Danielle Woods said.

To help demonstrate the benefits of improving productivity, the PC says gains in productivity since the 1960s means a loaf of bread which used to cost the average worker 10 minutes of pay to buy now costs four minutes.

In order to get Australia’s ailing productivity back up, the commission proposes five key areas.

Starting with businesses, the PC says the corporate tax system needs an overhaul to encourage businesses to start up, invest and continue to upskill their workers.

It says successive governments over the last two decades have made starting a new business or investing in key infrastructure including housing or moving to greener fuels has become harder than it needs to be.

Part of these changes involve businesses investing in workers. Picture: NewsWire / John Appleyard

“Creating a more dynamic and resilient economy, sets out draft recommendations for an economy that has the right settings and rewards to encourage businesses to invest and grow,” the report found.

“It recommends changes to the corporate tax system to improve investment incentives, and changing the way the government approaches regulation, to spur investment and productivity growth.” 

Federal Treasurer Jim Chalmers will hold a three-day economic round table, with a focus on productivity, next month.

Stopping short of putting the blame squarely on governments, Ms Wood said the government doesn’t hold all the cards, but pointed to the important role they can play.

“Almost everything the government does – taxing, regulating, delivering services – affects the pace and direction of economic growth,” Ms Wood said.

The PC also says Australian workers need to be upskilled and a more flexible environment to allow workers to change roles needs to be created.

While the PC argues Australians need more training, the ACTU says they need better management.

The ACTU argues a happy worker is a prosperous worker. Picture: NewsWire/Ian Currie

According to separate survey data, the ACTU argues workers are dealing with higher workloads, burn out and bosses with limited managerial capacity to support employees.

They say this is leading to a disengaged workforce, leading to weaker productivity.

According to the ACTU, half the workforce – or around 7.3 million workers – regularly work extra hours or do overtime and high workloads were ‘regularly or always’ experienced by more than 28 per cent of all workers.

Slightly more than half say it is due to not having enough workers.

ACTU secretary Sally McManus says unlocking workers through better management will help lift Australia’s productivity despite the PC largely ignoring it.

“Too often, too many employers have equated lifting productivity to doing more with less pushing people to work harder for longer. This leads to burn out which harms productivity.”