Ideas to energise Australia’s productivity must be affordable, the treasurer says, as the federal government opens the floor to work out the next steps in its economic agenda.
Key economic stakeholders will descend on the nation’s capital for the federal government’s much-anticipated economic roundtable on Tuesday, as they offer solutions to Australia’s languishing productivity.
Treasurer Jim Chalmers has already been bombarded with proposals on areas from tax reform to environmental law and red tape.
But budget sustainability remains a key priority, he said.
“There are a lot of good ideas – we need to make sure they’re affordable,” he told Sky News on Sunday.
“The ones that we can pick up and run with are the ones that we can pay for.
“Our economy is finely balanced between the progress that we have already made and the productivity we will need to sustain and grow living standards into the future.”
The roundtable is expected to lay the groundwork for Labor’s second-term economic agenda.
While he stressed he did not want to constrain any ideas, Mr Chalmers has ruled out changes to the GST, noting its current settings were “broadly right”.
The opposition has remained sceptical of the economic roundtable.
“We don’t have a lot of expectations,” coalition industry and innovations spokesman Alex Hawke told Sky News.
The Productivity Commission released its fifth and final report ahead of the roundtable after it was tasked with looking into economic resilience, the clean energy transformation and delivering care efficiently.
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 … 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.
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” in the past decade, contributing to lacklustre productivity performance.
While economists are angling for tax reform, they warn changes must come as part of a broader package to prevent a greater burden being lumped on working people.
To achieve 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.
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 an opportunity to unleash gains without compromising quality of care, while also reducing costs.
AI can reduce the 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 have been put forward as a means to ensure people have the foundational skills to smooth pathways to upskilling and entering new occupations.
Australian Associated Press is the beating heart of Australian news. AAP is Australia’s only independent national newswire and has been delivering accurate, reliable and fast news content to the media industry, government and corporate sector for 85 years. We keep Australia informed.
