Productivity summit: Commission takes aim at ‘poor decisions’ by Government making Aussies worse off

Getting productivity on track would make Australian workers $14,000 better off in a decade, but top economists warn “poor decisions” by governments are holding the country back.

Pressure to fire up the economic engine has been building ahead of Treasurer Jim Chalmers’ summit in Canberra next month, and new research from the Productivity Commission adds to the case for reform.

Productivity has been heading backwards and has stalled close to the level almost 10 years ago, the key reason why living standards are not improving and growth has been slow.

“Australia should be a place where children born today can expect to live better and more prosperous lives than the generations who have come before them. Productivity growth is essential to fulfilling that promise,” Commission chair Danielle Wood said.

‘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.”

She said productivity — getting more with less — was the main reason “life today looks so different from life in the ‘60s and ‘70s”.

The Commission’s research showed the average Aussie needed to work up to 80 minutes to buy a cinema ticket in 1972, compared to just 30 minutes today.

Flying from Melbourne to Sydney now requires five hours at average pay, instead of almost 1.7 weeks back 50 years ago.

There’s heated debate about the role of government in driving improved productivity, but the Commission said policy decisions do matter.

An example of doing the job right was competition reform in the 1990s, which grew the economy about 2.5 per cent.

While the Commission found productivity was slow across the developed world, the report took a dig at political leaders lacking courage to make change.

“Poor policy choices by successive governments, coupled with a lack of appetite for economic reform, have also weighed on productivity growth by adding unnecessary frictions to the Australian economy,” the report said.

It came as an alliance of industry lobbyists urged governments to slash red tape 25 per cent by 2030 and speed up approvals for homes and green energy projects.

The 27 industry bodies argued the nation’s “economic rule book is out of date”, in a joint submission to the Commission.

The organisations — led by the Business Council of Australia — promised that slashing red tape would mean “faster home builds, quicker loan approvals, and lower prices at the checkout.”

Former Queensland Labor Premier Anna Bligh, now a banking lobbyist, said investment and innovation needed a boost to support economic growth.

“If we want future generations to enjoy the same living standards we do today, we must work smarter by backing world-class research and and removing barriers that hold investment back,” she said.