The Business Council of Australia (BCA) thanks the Committee for the opportunity to make a submission to the Inquiry into Productivity.
The Committee has made many useful observations in its discussion paper, including:
- “Productivity is fundamental to economic growth, Australia’s prosperity and living standards.”
- “Since the mid-2000s, productivity has slowed significantly across the economy.”
- The stagnation in productivity growth has “contributed to weak real wage growth and is reducing national competitiveness while increasing household cost-of-living pressures”
- “The Productivity Commission commented that regulation is imperative but can also stymie productivity growth, such as in the housing and construction industries where heavy regulation has constrained productivity and increased housing costs.”
- “Investment, and related capital flows, are a key contributor to productivity growth and overall economic growth.”
- “Australia’s high corporate tax rate of 30 per cent makes Australia a less attractive destination for foreign investment.”
Building on these important observations, the BCA notes Australia needs competitive economic settings to secure investment, and we need investment to lift productivity. Productivity growth is essential for sustained growth in real wages, as supported by the Reserve Bank of Australia, Treasury and the Productivity Commission.
Productivity growth also supports economic resilience, fiscal sustainability and global competitiveness. Without it, the economy cannot absorb shocks, fund critical public services, compete internationally and sustain the industrial and technological capability required in a more contested world.
This makes it particularly concerning that productivity growth is flatlining. Australia has effectively had no net productivity growth since 2019 – and barely any growth at all in the past decade. This is an unprecedented period of no net productivity growth – it has not happened before in the labour productivity series which commenced in 1978.
Addressing low productivity growth
There are many challenges that need to be addressed to tackle Australia’s poor productivity performance, including:
- prioritising a better regulation agenda that lifts national supply side capacity – helping businesses
to thrive and employ Australians, building new homes more quickly and cost effectively, and
delivering the infrastructure required for the future economy; - delivering a tax system that incentivises the growth we need to pay for our future;
- ensuring our energy requirements are affordably and reliably met along the path to net zero,
while ensuring industries remain internationally competitive; - facilitating the creation and adoption of new innovations, to create the jobs of the future, with a responsible and balanced approach to regulation;
- ensuring our people have the skills they require to succeed in a dynamic world;
- reducing government spending to ease the burden it imposes on private sector growth and place downward pressure on inflation; and
- restoring balance to an industrial relations system too firmly skewed against the reasonable needs of our nation’s approximately one million employing businesses, especially following recent changes in areas such as intractable bargaining, increased union access rights and multi-employer bargaining.
The BCA welcomes the preliminary work the government has done on a productivity reform agenda
through the Economic Reform Roundtable process in mid-late 2025, noting sustained ambition and
action is required over the medium- and longer-terms to deliver real outcomes.
The starting point must be a change in mindset across the board. This means recognising both the
urgency of our competitiveness and productivity challenges and prioritising the Big Questions
identified by the BCA (and set out in our submission). This will help to unlock future national prosperity and improved living standards.
The steps outlined in this submission comprise policy proposals around making it easier to invest, employ, do business, trade and support small businesses. Also included are proposals around improving how we make and deal with regulation – supporting the transition to net zero with affordable and reliable energy, and supporting the modernisation of the Australian economy.