Australia is being urged to share around the nation’s prosperity as its leaders weigh up big picture reform to shape the future economic landscape.
The Productivity Commission released its fifth and final report as the government, business and union leaders prepare for Jim Chalmers’ economic roundtable this week.
The treasurer is attempting ambitious policy reform as the government grapples to find a solution to Australia’s tumbling productivity.
The talks will also look at ways to strengthen the budget, as competing demands continue to heap massive pressure on the nation’s finances.
Building a more resilient economy, the clean energy transformation and delivering care efficiently, are among the five priority areas it was tasked with looking into.
The draft recommendations handed down are designed to improve living standards for people, including growth in wages and more leisure time.
Improving productivity must be guided with a “clear purpose”, Centre for Policy Development chief executive Andrew Hudson said.
“That should be ensuring kind of the benefits of the economy are shared widely, and that they are able to kind of ameliorate inequality, cost of living, housing shortages … to ensure that productivity gains translate into better lives,” he told AAP.
“It’s been good to see that there are some ambitious and bold ideas there and let’s hope that the economic reform roundtable adopts some of those.”
To bolster business investment, Australia’s headline company tax rate should be reduced to 20 per cent, the commission says.
This would attract foreign capital into the country after business investment had “fallen notably” over the past decade, contributing to lacklustre productivity performance.
“Australia needs to reduce its use of the current, inefficient company tax system and shift to a system that better encourages investment,” the commission says.
While economists are angling for tax reform, they warn any changes must come as part of a broader package to prevent a greater burden being lumped on working people.
On achieving the nation’s climate target at the least cost, the commission found the federal government should prioritise expanding the safeguard mechanism, designed to reduce greenhouse gas emissions at the country’s biggest polluters, to include more industrial facilities.
Energy infrastructure was taking “too long” to develop and faster approvals would reduce emissions and lower costs.
Boosting resilience to climate fuelled disasters would help lower the damage bill and lead to a healthier population, the commission says.
The care economy, which includes early childhood education and aged care services, accounted for 12 per cent of the workforce in the 2022/2023 financial year, while contributing eight per cent to the nation’s gross domestic product.
Improving productivity in the sector is seen as challenging because of the human nature of care.
But the commission says new technologies offer opportunity to unleash gains without comprising quality of care, while also lowering costs.
AI can reduce time workers spend on reporting, while robots can perform routine tasks such as vitals monitoring and logistics, the commission says.
To provide the nation with the workforce it needs for a growing economy, changes to secondary and post-high school education are put forward as a means to ensure people have the foundational skills to smoothen pathways to upskilling and entering new occupations.
The government has been urged to lead efforts too for equitable access to AI and educational technology in schools.
Removing the requirement for financial reports to be submitted in hard copy would be a use of data and digital technology to lift efficiency, which the commission described as the “modern engines of economic growth”.
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