Article by Matthew Cranston and Eli Greenblat, courtesy of The Australian
12.05.2025
Business leaders have blasted Jim Chalmers’s call for a six-year extension to fixing Australia’s productivity levels, with waterfront reformer Chris Corrigan saying the Treasurer had a “complete inverse of a plan for productivity”.
Former productivity commissioner Michael Brennan also entered the debate on Tuesday adding pressure for Dr Chalmers to prioritise efforts on productivity, after the Treasurer insisted it would take a third term in government to turn decade-low productivity growth around.
Dr Chalmers has received a post-election briefing from Treasury secretary Steven Kennedy highlighting a “deteriorated” global economic outlook that is “even more uncertain” than it was pre-election, with a warning that Australia’s economy would “not be immune” and needed to be “prepared for potential spillovers and future economic shocks”.
Key to insulating Australia from global shocks is productivity but that has collapsed -1.2 per cent over the past year. Measured as GDP per hour worked, the 10-year average annualised growth is now just 0.2 per cent – the weakest in at least 35 years.
During the election campaign, Dr Chalmers said the government would make productivity the top priority but “it will take more than one term to turn it around”.
He has since asked for more time, insisting it will take three terms to change the productivity trend – longer than it had taken to make progress on inflation.
He has also ruled out delivering on all the recommendations from the Productivity Commission’s productivity report to be released later this year.
The former head of Patrick stevedores Chris Corrigan, who oversaw massive productivity improvements on the waterfront starting with the 1998 waterfront dispute, said Dr Chalmers would introduce policies that worked against productivity.
“The ALP plan is to widen the tax base, including unrealised gains on superannuation, and transfer the collections from the productive sector to the non-productive sector, including the expansion of the public sector,” he said. “With productivity, one needs a plan.
“This is the complete inverse of a plan for productivity and will continue the decline of the last decade or more.”
It is estimated that on a trend basis, productivity has been so poor that GDP is $250bn lower than what it would have been had productivity met Labor’s 1.2 per cent growth goal.
However, Labor says the rate of productivity growth slowed for seven consecutive years in the lead-up to the pandemic – the longest consecutive decline since records began.
Dr Chalmers has asked the Productivity Commission to provide a report focusing on five areas of the economy including human capital, competition policy, technology, energy and the care economy, but has ruled out accepting every recommendation.
Housing Industry Australia chief executive Simon Croft said the Treasurer already had one report on his desk that he needed to act upon immediately.
“In February this year, the Productivity Commission released a comprehensive assessment on the policy directions needed for improving construction productivity, including reducing regulatory burden, streamlining and speeding up approval processes, supporting innovation and improving workforce flexibility.
“This report provides a clear and comprehensive policy blueprint for reform and HIA is calling on the returned federal government to action the recommendations from this report as part of their first-order priorities.”
Former productivity commissioner Michael Brennan weighed in, saying while the government had a renewed competition agenda to help lift productivity, it needed to act on it quickly.
“The government has in place some good architecture, like a renewed competition agenda, but it will be important to progress measures under this agenda as a matter of priority,” he said.
“It’s true that there is no single lever that provides a quick fix for slow productivity growth. It’s a broad-based effort and you want multiple policy settings focused on encouraging private investment, competition, innovation, new firms and new business models.”
On Sunday, former Labor minister for industry and science Ed Husic delivered a critique of the government’s approach to productivity.
“I also stressed the need for investment allowances to renew machinery to see capex grow, to have a productivity burst as well, because it is good to have strong businesses, great jobs and a strong economy that is well fuelled into the future,” Mr Husic said.
Woolworths CEO Amanda Bardwell said it was constantly looking at ways to improve productivity and she welcomed the government doing the same.
“I think it has absolutely been called out by many business leaders as a key focus in terms of wanting to improve productivity,” Ms Bardwell said.
“We look forward to working with the government and business to be able to focus on that – it’s important for Australia.”
High among the list of productivity reforms for business is industrial relations.
However, last term Labor introduced new workplace regulations such as cracking down on the use of labour hire, which BHP chief executive Mike Henry has labelled a “productivity killer”.