Productivity Commission opens consultation on 15 reform areas
The news: The Productivity Commission (PC) will on Monday call for submissions on areas of priority reform, with Treasurer Jim Chalmers stating that “flatlining productivity” is one of the biggest challenges facing the nation.
The numbers: A statement released by the Treasurer says the Labor government inherited the largest quarterly fall in productivity in 45 years, with productivity going backwards by 2.4% in the June quarter 2022 – the largest quarterly fall since June quarter 1979. Over the decade to 2020, average annual labour productivity growth in Australia was the slowest in 60 years, falling to 1.1% compared to 1.8% over the 60 years to 2019-20.
The context: The PC, which was charged with tackling productivity-issues by the Albanese government in 2024, has identified 15 areas for priority reform and will consult on those initiatives from today.
“Boosting productivity is the only sustainable way to improve Australians’ living standards, but productivity growth has stagnated in the past decade. It’s now at its lowest ebb in 60 years,” said PC chair Danielle Wood.
“The reform areas we’re exploring are ... the starting point for the targeted research and consultation we are doing to ensure our recommendations are robust and implementable," Wood said.
The 15 reforms fall under five inquiries which include:
- Creating a dynamic and resilient economy
- Building a skilled and adaptable workforce
- Harnessing data and digital technology
- Delivering quality care more efficiently
- Investing in cheaper, cleaner energy and the net zero transformation
Chalmers said the government is “revitalising competition” through merger laws reform, the 10-year Competition Reform Roadmap, and the $900 million National Productivity Fund.
Additionally, the government will continue work on reforms including occupational licensing for electricians, abolishing non-compete clauses, unlocking opportunities across AI and digital assets, streamlining regulation and standing up the ‘Single Front Door’ for major investors into Australia, strengthening the National Energy Market, leveraging health technology more effectively, and enabling construction of prefabricated and modular housing.
Chalmers said the PC's recommendations will be considered within the context of the fiscal restraints “inherited” from the previous government.
“We might not be able to run with everything, but we will consider all of it and see what we can progress,” Chalmers said.
Last week the SMSF Association urged the Albanese government to address flaws in its proposed superannuation tax, which will include unrealised capital gains in its calculation of investment earnings from high-value super accounts. The association cited the Productivity Commission's 2018 inquiry report which emphasised the need for greater competition in the superannuation sector, claiming the new tax undermines that goal by favouring large superannuation funds over SMSFs.
Consultation on the reform areas will be open from Monday 19 May through to 6 June. The interim reports of these five inquiries will be delivered over July and August. Following further consultation to inform the final inquiry, reports are set to be delivered to government in December.
The sources: Jim Chalmers Statement, Productivity Commission press release
