Topics: Productivity, migration
E&OE
Melissa Mackay, Host: Bran Black is the BCA’s Chief Executive, and he joins me now from Sydney. Bran, thank you so much for your time this morning. Look, the Business Council of Australia’s analysis is showing that we’re on track for the worst productivity growth on record. What factors are you looking at there to come to this conclusion?
Bran Black, Chief Executive: Well, what we’re doing is taking the productivity growth that we’ve seen over the last six years of the 2020s, and we know that when we look at that data, what that shows is that on average, we’ve declined year on year by negative 0.1 of a per cent.
Now, that’s compared with what was previously or presently the worst decade on record for productivity growth, which is the 2010s, which is positive growth of 1.2 per cent per year.
So what that highlights is that there is already a significant gap between the 2010s, which presently is the worst decade on record, and our existing decade, the 2020s, and that is deeply concerning because when productivity is low, it reduces our capacity to increase living standards and give all Australians the opportunity to get ahead.
Melissa: So, what is it that’s gotten us to this point?
Bran: Well, it’s successive governments failing to adequately take the type of steps that are required to deliver productivity reform. What that means is that we don’t have the type of competitive settings in Australia that we do see in other countries overseas that help drive business investment. Business investment, of course, being the primary basis for productivity growth, but it is very clear that we need the current Government to do much more in terms of driving productivity reform, and that includes steps like reducing regulation.
We’ve consistently called for a target of a 25 per cent cut in the value of regulation on our economy, comprehensive tax reform that tackles our uncompetitive tax rates in terms of company tax, but also income taxes and consumption taxes, and of course our uncompetitive industrial relations system, which is now fundamentally out of balance.
Melissa: The Prime Minister said yesterday, Bran, that he acknowledges productivity has been weak for the last couple of decades. He says “The Government was driving through those issues with programs such as free TAFE, the Government’s approach to AI.” Do you agree that these are things that will help to improve this productivity issue that you’re talking about here, or is there something else that you would like to see the Government doing?
Bran: Well, there is no question that improving our access to skill sets is going to increase our prospects of turning around our productivity malaise. There is also no question that AI holds enormous potential to lift our productivity. But I would caution against Australia putting all of its productivity eggs in the AI basket.
We see that there are many countries around the world, including our core competitors like the US, the UK, New Zealand, and Canada, that are also taking steps to try and improve their productivity through the application of AI, but in addition to that, they are going out of their way to try and make their underlying settings, so their taxation settings, their regulatory settings, their industrial relations settings, as competitive as possible. We need to be doing likewise if we’re going to keep up with them.
Melissa: We’ve just been reporting, of course, on a slightly different topic on One Nation’s migration policy, looking at reducing immigration by 750,000 people over three years. What was your initial response to that announcement, and how do you think that would impact productivity in Australia?
Bran: Well, we’ve just seen the announcement today, so we’re looking through the details very carefully over the course of today and the coming week. But prima facie, that is a very significant cut, and our concern would be that type of cut would have a significant detrimental impact on our economic growth and on our prospects to deliver prosperity for all Australians.
You have to remember here, and this is the really important point: you have to remember that as things stand right now, the Australian Treasury forecasts that come 2060, we can expect a gap between revenue and expenditure of $140 billion a year. And that I should say, that gap comes about largely because we’ve got an ageing population, so a declining working population.
But to address that, the best thing that we can do is grow our economy. And yet, as things stand right now, one in three occupations reports a skills shortage. So we can’t grow our economy and reduce that gap between government revenue and expenditure, unless we’re prepared to train our people internally, but also to recognise that historically and into the future, Australia is going to need skilled migrants.
We need them for the projects that drive our economic growth. So the starting point for any conversation with respect to migration, can’t be simply having the objective of cutting numbers. It has to be how do we go about delivering the growth that ultimately locks in and secures our way of life.
Melissa: Bran Black, the Business Council of Australia CEO. Thanks very much for your time and analysis this morning.