MEDIA COMMENTARY: Sunshine Coast Business Council Chair, Sandy Zubrinich
“Productivity in Australia is at record low levels. This month, the RBA cut its productivity forecast to just 0.7 per cent per annum (previously 1 per cent)[1], with economic growth expected to remain subdued and living standards showing little to no improvement. A bleak outlook.
“We also saw Treasurer Jim Chalmers call productivity a ‘major challenge’ ahead of the Federal Government’s Economic Reform Roundtable this week. The agenda currently comprises three broad topics: resilience; productivity; and budget sustainability and tax reform, all big challenges.
“Earlier this year, RBA’s Head of Economic Analysis Michael Plumb indicated that the level of measured productivity in some parts of the non-market sector – health, education and public administration – have increased their share of the economy and are the least productive in output terms. [2] High employment growth in these areas has weighed heavily on the nation’s productivity.
“Yet some say there is no crisis. The Australia Institute’s Centre for Future Work argued that claims of a ‘productivity crisis’ are overblown, and that the true culprits for falling living standards are sluggish wage growth and income inequality.[3] Meanwhile, unions are using the Economic Reform Roundtable, to call for a 4-day work week at the same pay – a move that would add another impediment for economic growth and would certainly favour the public sector over the private sector again.
“There are many reasons cited by politicians and experts for low productivity. Big government, poorly targeted government investment and high levels of government spending are surely at the top of any list in terms of smothering productivity. Public sector expansion over the past 3 to 5 years has been unprecedented, funded by tax-payer money and burgeoning debt while stripping talent and resources out of the private sector, historically regarded as the ‘engine’ of economic growth, living standards and innovation.
“The Australian economy has been on a slowing trajectory for several years and the repercussions of letting the private sector stall, without the support of sound, pro-growth economic strategies and policies, are now apparent. Governments are reluctant to take what they see as politically unpopular decisions, particularly when it comes to trimming the public sector workforce. However, without decisive action by all levels of government, the slowdown will continue. Cutting the size of their workforces will not only ease pressure on government budgets, but importantly will release workers for the private sector, and restore the confidence businesses need to continue to invest in new technologies and processes to start lifting productivity.
“It’s time for government and business leaders to be upfront with Australians – only by shifting the balance back towards a thriving private sector, can we deliver higher productivity, new careers and a better standard of living for all. Nobody expects this to be easy, but it is clear that it’s time to stop kicking the problem down the track.
“We hope the Roundtable brings together the wisdom and resolve to understand, agree and confront the key drags on the national and state economies and to deliver the actions needed to move forward quickly. Otherwise, we risk more disparate, politically motivated initiatives that fail to put Australia back on the required growth path, leaving us lamenting our poor productivity and declining competitiveness.
“Queensland is embarking on a huge investment program in the lead up to delivering the Brisbane 2032 Olympic and Paralympic Games, which is a perfect test case. Labour shortages and red tape constraints are going to be a major factor in whether the ambitious infrastructure program can be delivered on time by government and the private sector. Time is ticking.
“The Roundtable must deliver more than polite discussion. It needs a clear, united commitment to tackle the structural barriers holding Australia back – from labour shortages to overregulation – with practical, measurable reforms. Without bold, decisive action, the opportunity to reset our economy will slip away, and Australia will remain stuck in a low-growth cycle while competitors surge ahead.”