Kate Chaney (Curtin, Independent) Share this | Hansard source

I move:

That this House:

(1) notes that:

(a) in 2023, the Government revised down its annual productivity growth assumption from 1.5 per cent to 1.2 per cent, reflecting the slowdown in productivity over the past two decades;

(b) Australian productivity growth is now behind most comparable nations including the United States, the United Kingdom, Germany and France;

(c) productivity growth is a key contributor to increases in economic welfare, accounting for 80 per cent of growth in real wages; and

(d) contributing factors to the decline in Australian productivity include:

(i) complicated workplace laws, regulation and taxation;

(ii) declining educational outcomes; and

(iii) under-investment in research and development relative to peer economies; and

(2) calls on the Government to issue a formal response to the Productivity Commission's five-yearly productivity inquiry report, Advancing Prosperity, presented in March 2023.

Productivity is about doing more with less, meeting our needs with fewer working hours and fewer resources. It's not necessarily about consuming more goods; in fact, most of our economy and about 80 per cent of our jobs are now in services. But it is about working smarter, not harder, to improve our standard of living. In the last decade productivity growth has been the slowest in 60 years: about 1.1 per cent per year compared to an average of 1.8 per cent for the 60 years before that. Australia has dropped from sixth in the OECD productivity rankings in 1970 to 16. Some sectors are worse than others. Productivity in the construction sector has actually declined about 12 per cent over the past decade. This is partially driven by restrictive work practices and a lack of investment in innovation. This contributes to our housing problem.

There's no sign that productivity will get better without intervention. Last year the government revised down its annual productivity growth assumption from 1.5 per cent to 1.2 per cent, reflecting the slowdown in productivity over the past two decades. This means lower living standards for all Australians and less ability to fund and deliver the services the community expects. We can expect further productivity headwinds, with climate change creating more extreme weather events, geopolitical tensions driving more trade barriers for less-efficient resource allocation and demographic changes driving the need for less productive care services. For a long time, every generation has expected to be a bit better off than the one before, but this is no longer true.

There are lots of factors that affect productivity. Much of the industrial world is facing similar challenges. Despite technology changes over the last 15 years seeming pretty radical, they are not translating to greater growth the way railroads and indoor plumbing did. It's harder to achieve productivity growth in services, and, as we get richer and older, services, including care, make up more of our economy.

Many of these factors are outside government control, but we need government to take a long-term perspective and pull all the available levers to ensure productivity growth so that young Australians can look forward with the same optimism as previous generations. With little genuine economic reform for 25 years, we've relied heavily on increased demand and prices for our commodities rather than adding to our economic complexity or focusing on productivity.

We are overdue for a broad tax reform discussion to ensure our tax system is fit for purpose for the next generation. Depoliticising tax reform will be key, and we need appropriate and trusted institutions to contribute to this. Luckily, we already have the Productivity Commission, so it's important that we actually listen to and respond to its advice. Government needs to be held to account when it comes to recommendations from independent experts. As taxpayers, we all pay for them, so we should be making the most of their advice.

The Productivity Commission does a five-yearly productivity inquiry and presented its last report, Advancing prosperity, in March last year. This report is 1,000 pages long and provides 29 reform directives. On education, there are recommendations about the use of technology, access to best-practice resources, innovative school models, lifelong learning and student transitions to work. On migration, there are recommendations about better targeting the skilled migration system and reducing qualification barriers faced by skilled migrants. On Workplace Relations, there are recommendations about simplification and modernisation. Technology -related recommendations include internet access, cybersecurity, government data use and better diffusion of new knowledge, especially in the care economy. Business dynamism could be improved through competition tax, trade and regulation reform. Looking to the government's own activities, the report says infrastructure should be subject to cost benefit-analysis, health funding should incentivise innovation, and data and foreign expertise should be used to drive best-practice service delivery. When it comes to decarbonising, climate risks should be disclosed on property sales, adaptation-related infrastructure should be subjected to cost-benefit analysis, the safeguard mechanism should be expanded to cover the whole economy and the integrity of carbon offsets should be improved. These are all worthy recommendations.

To show that it's serious about tackling Australia's productivity challenge, I call on the government to publish a formal response to the recommendations in the Productivity Commission report and commit to implementation. Voters are genuinely interested in leaders who take a long-term view, and this is a great opportunity to demonstrate a commitment to looking beyond an election cycle.

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