Australia’s flagging competitiveness and productivity
19 November 2024
An Australia that competes harder and produces more
Australians enjoy an extraordinary quality of life. It is becoming ever clearer, however, that this will not continue if we are complacent. As things stand, other nations are competing harder, winning more
investment, and reaping the productivity benefits.
Productivity is the primary factor which will define Australians’ future quality of life. Simply put, there are ‘no free lunches’ and we must be able to produce more with what we have if we are to sustain growing wages and national prosperity.
If businesses cannot run efficiently and invest with confidence to strengthen their operations, the cost of what they are producing is higher than necessary. If the opposite is true, however, higher wages can be afforded without fuelling inflated prices.
Australian productivity has not meaningfully improved in a decade and today, our productivity growth languishes well behind most comparable nations—including the United States, United Kingdom, Germany, and France. Other nations are winning the business investment that can make our efforts more productive, in new technologies and capabilities.
This report addresses the growing challenge of Australia’s lagging productivity, and the need to compete harder for business investment which can help improve it.
Productivity growth is one of the metrics most closely tied to our Australian quality of life, and a critical aspect of our ongoing challenge to manage inflation. The report finds that productivity growth (which is currently growing at 0.5 per cent over the last year) would need to quadruple to around two per cent each year to 2030 just to match our performance last decade, which is the weakest in 60 years.
Importantly, the report also identifies where the most effort is needed to shift the momentum of our productivity towards growth:
- Streamlining and removing regulatory red tape to make it easier to do business;
- Reversing recent workplace laws that are a handbrake on productivity growth;
- Undertaking education reforms to enhance workplace skills and capabilities;
- Reforming our taxation system to better support business investment; and
- Supporting increased research and development along with the uptake of new technologies.
