Productivity growth this decade is on track to be the worst ever since records began almost 70 years ago, the Business Council of Australia warns.
It says that new economic analysis shows Australia ‘urgently needs’ drastic reform to avoid the 2020s becoming the worst decade for productivity growth.
And the council is pushing for tax and policy reforms to attract new investment which it says is key to boosting productivity.
Business Council Chief Executive Bran Black says in a statement that investment is key and says businesses are waiting on policy reforms “to get the settings right”.
“The way to start is to cut the cost of red tape by 25% by 2030, reform our tax system to encourage investment, make workplace laws simpler and more flexible, and make it easier for low-risk investment to come into Australia,” he claims.
(The statement makes no reference to real wage increases).
COUNCIL FLAGS PRODUCTIVITY MEASURES
“We want Australians to enjoy higher living standards; that means we need more business investment,” Black says.
“Government policies in tax, workplace relations and regulation impact productivity and have made it so much harder for businesses and the economy to grow.”
“For the past six years, Australia went backwards on productivity.
If we stay on the current path, we’ll record the worst result since records began in 1960,” he says.
“Unless we turn these results around, Australians will continue paying the price with weaker real wages, greater pressure on the cost of living and lower living standards.”
The council says its analysis found labour productivity fell by an average of 0.1% a year for six years; it says that even if a Treasury budget assumption of 1.2% growth in the next few years comes true, the decade’s average growth will be 0.2% annually.
The council says that just to match the 2010s’ growth rate of 1.1% (which it calls the worst decade in 60 years) would require an annual rate of 3% over four years, a level not seen since the 2000s.
