Topics: 2026 Intergenerational Report
E&OE
Tom Connell, Host: Joining me now is Business Council of Australia Chief Executive Bran Black. Thank you for your time. Look, this is a report that does talk about a lot of challenges, conflicts, particularly climate change, and an ageing population. So more deaths than births by the 2060s, but it all seems to be underpinned by productivity. 1.2 per cent is where it’s going to be at. It’s at 0.3 per cent now. Is this viable?
Bran Black, Chief Executive: Well, it’s actually negative 0.2 of a per cent right now. So we are a long way off that productivity assumption of 1.2 per cent. Now that doesn’t mean that we can’t do it, but we’ve got a huge amount of work to do to get into that type of area.
Now, to give you a little bit of context in terms of those figures as well, we’ve averaged over the course of the last six years of the 2020s just negative 0.1 per cent productivity in terms of the overall position. That’s against the average in the 2010s of 1.2 per cent which was the worst decade that we had on record at that stage.
So we are facing immense challenges, and as you say, our capacity to do all of the things that need to be done that are referenced in the Intergenerational Report ultimately come down to our capacity to grow the economy in the way that is assumed with productivity growth.
Tom: And given the fact that we’re negative now and it’s not going to flip straight away, we’re going to have some bumper years amongst that, aren’t we, to make up for that essentially? And a lot of it, what do you what do you see it as underpinned as, because AI gets a big mention. What else is there in this, or in the Government’s plan, indeed in budgets, that would actually increase productivity?
Bran: Well, the big assumption that appears to be made in this report is that AI will deliver the bulk of that productivity growth. So the bulk of that 1.2 per cent. Now we certainly hope that AI does deliver productivity growth of 1.2 per cent. Indeed, more would be ideal, but we can’t afford to put all of our productivity eggs in the AI basket.
We have to do what other countries are doing, our competitors are doing, and invest in the AI opportunity, sure, but also invest in improving the underpinning settings that we’ve got to attract business investment, and the simple point is that this Government hasn’t done enough in that regard, nor have successive governments over the course of the last couple of decades. So it’s now the burning platform to act.
Tom: There’s the most transformational tax reform, obviously, has warnings carried to it in terms of capital gains tax. You’ve obviously been pushing for different changes. It hasn’t been a business-friendly government in the last couple of years. Is that is that fair to say? If you look at IR and other changes, it’s going the opposite way to what you want to go.
Bran: Well, certainly in terms of industrial relations, yes, that takes us backwards.
Tom: What’s been positive? What have you seen that you go, “Great, there are some really good changes overall.”
Bran: Look, we have seen some productivity enhancement changes. For instance, the reduction in red tape that is in the Budget is useful, but I would see that as a first step because much more just there is required to be competitive with our competitor nations.
But the simple point is, the Government has not done enough to drive productivity reform, and we see that in the figures. As I say, as things stand right now, in the last 12 months, productivity has declined by 0.2 of a per cent, and that limits our capacity as an economy to grow. everybody’s But it also limits our capacity to deliver real wage increases, which ultimately go to our capacity to make lives that much bit better.
Tom: I mean, you’re sitting around at the what was rebranded the economic and something else roundtable, productivity didn’t end up in the title. A lot of business figures, there’s a sense, and there’s plenty of commentary that you’re not perhaps listened to, but not agreed with a lot by this Government.
Do you see perhaps an opportunity that the polls are going pretty badly for them, if the economy doesn’t improve in the next year or 18 months, they’re facing an uphill battle, and maybe they’ll need to maybe turn to business more, even if they don’t want to.
Bran: I think we have to. We absolutely have to. And it’s not just a question of turning to business. It’s a question to turning to the policies which are delivering the changes that will ultimately make people’s lives better.
We know people are doing it tough, but they’re doing it tough ultimately because of this productivity crisis that we have in our country. Now we see other countries taking enormous steps to try and drive productivity. Take Prime Minister Carney in Canada. In the space of the last year, he has cut the need for a federal approval for major projects in circumstances where a province, their equivalent of a state, says, “Okay, go ahead.” And just last week, he announced what he calls the Productivity Mega Deduction, which means that 65 per cent of business assets are eligible for immediate depreciation. So, no need to play that out over a schedule of years. You get the full expense depreciated in the year in which you incur it.
Tom: Is the relevance now that while there’s this sort of global race on AI, that’s the time to get people to buy up, get your business ahead of the others, whatever it might be. Because if you wait, if you’re doing it slowly while Canada or other countries are doing it quickly, we fall behind. Is that why now matters?
Bran: It does matter now because we are seeing that other countries are, per Canada, taking the steps to get further ahead. We do an analysis every year called the Global Investment Competitiveness Index. We saw this year that we ranked 21 against the 42 countries that we measure against. But critically, we are behind our core competitors of the US, the UK, Canada, and even New Zealand.
Tom: Is there a sense Canada had more of a burning platform? Huge unemployment until recently, so they had big cuts to migration, so then they need the economy going. Whereas we have a forecast where it could be really tough times, but for now, we’re getting through. Is it almost like it’s not quite crisis time, people don’t feel like it’s a crisis, so you can’t act like it’s a crisis?
Bran: Well, I think you’re right in terms of looking at Canada because they also saw that they had a reasonably existential issue arise in the context of the US administration’s approach on tariffs as well, which has given that government a mandate for significant change –
Tom: Crisis becoming opportunity –
Bran: Indeed, and they are taking advantage of that opportunity. We, I think, need to see ourselves as being something like the frog being boiled slowly. We are steadily seeing our capacity to deliver living standard improvements decline.
Tom: How many degrees is it in the saucepan right now?
Bran: I think that’s probably a little bit beyond me to be able to put a figure on that. But one way or the other, we are in a difficult position, and it’s becoming increasingly difficult.
Tom: So immigration, just quickly, Labor having that plan. What did you think of the details on occupations because this is the nitty-gritty. Are there any particular ones that are missed here? Labor did talk up, for example, construction as three times more than they used to be getting in overall in terms of bringing skilled migrants in.
Bran: So we’re looking through that, and it’s a discussion piece that we’re having with our members at the moment. But the key thing that we would continue to argue for is that we’ve got skills gaps right across effectively a third of all occupations in our economy, so it’s challenging to say, “Well, let’s just identify these particular areas as the ones that we want to focus on.” There are skills gaps right across the board, and if we’re intent on being in a position to grow the economy in the way that we’d like to, we’ve got to have the people that can support us to do that.
Tom: Bran Black, thanks for your time.