Time for bold action to deliver growth and higher wages

The Business Council released a comprehensive national plan to reverse the nation’s productivity slump and drive competitiveness with a package of reforms to leave each Australian $7,000 better off a year after a decade.

“If we want sustained wages growth and to maintain full employment, the nation needs a reinvigorated economic growth agenda driven by large-scale investment, higher productivity and greater innovation,’’ BCA President Tim Reed said.

“Our report, Seize the moment, outlines how to deliver that agenda – putting forward the big ideas to dramatically alter Australia’s economic trajectory to deliver higher living standards.’’

Seize the moment outlines the six shifts we need to drive productivity growth and the ten policy levers to achieve action and get our economic fundamentals right.

“Lifting our performance in these 10 policy areas is how we achieve the high road of faster economic growth,’’ Mr Reed said.

BCA Chief Executive Jennifer Westacott said Australia was vulnerable to several global forces of change including digitisation and technological change, global volatility and decarbonisation.

“We need a coordinated, national plan to strengthen our economic resilience and ensure we turn these challenges into the opportunities that will deliver greater prosperity, higher wages and improved living standards,’’ Ms Westacott said.

“We cannot continue to experience record low levels of business investment as a share of GDP where more money leaves the country than comes in. Investment drives innovation which drives productivity and drives higher wages.

“We cannot continue to have an underperforming skills system that is failing to prepare Australians for the huge changes in the tasks that make up their jobs as the world of work changes,’’ she said.

Mr Reed said, “Seize the moment spells out how to move the dial on Australia’s lacklustre productivity rates. Productivity gains underpin higher wages and improved living standards by unleashing investment which drives innovation and the expansion of industries.

“The concept of productivity can sometimes feel very academic, but in practise it is simple – we need to work in new and smarter ways, so that each unit of input, each hour worked, produces more outputs. 

“Through the history of our nation, 80 per cent of our improved living standards have been achieved by following this simple proposition and there is no reason to believe we’ve reached our limits.

“Seize the moment also says now is the time to build on the momentum of Australia’s energy policy and put in place a coordinated approach to decarbonisation,’’ Mr Reed said.

“This pathway needs to see the Commonwealth, states and territories in lockstep on the policy architecture to achieve the nation’s 2030 target, outline the 2035 target, and reach net zero emissions by 2050.’’

Incoming BCA Chief Executive Bran Black said, “Nothing will be more important to the future of our nation than our ability to restore productivity growth in the years and decades ahead.

“I look forward to working with our members, our stakeholders and governments to drive this important agenda.

“Seize the Moment lays out a host of ideas that we believe should be considered, but there is no monopoly on good ideas and I’m optimistic that if we all work together our nation is up to this challenge,’’ Mr Black said.

Ms Westacott said the BCA’s report also outlined ways to transform the nation’s poor performing and fragmented education system with a coordinated approach focused on the importance of lifelong learning.

“Our reforms are built on three foundations: a national early childhood system that develops the competencies for the future; a rethink of the skills that students leave secondary school with including a renewed focus on work ready skills; and an integrated and interoperable tertiary system.

“We need a revamped tertiary system that makes it easier for people throughout their lives to move between vocational and higher education and incorporate work integrated learning,’’ Ms Westacott said.

“But having a great skills system is only one part of the solution to unlocking the great untapped economic strength of our people.

“We need unprecedented action to further the advancement of women in the workforce and ensure all Australians, including those who are traditionally excluded from work, can realise their full potential.

“On workplace relations, we have put forward a system that would deliver a more productive and competitive economy by driving collaboration and innovation,’’ Ms Westacott said.

Mr Reed said the work of successive governments in securing access to new and expanding markets should continue through an ambitious free trade agenda.

“But the nation must also come to grips with the poor performance of our tax system,’’ he said.

“As it stands, the design of the system doesn’t do enough to encourage and attract the type of large scale and global business investment needed to re-energise the Australian economy, or enough to incentivise people to work, save and invest.

“And finally, we need governments to continue to reform the important services that people rely on such as health, aged care and disabilities so these services better meet the needs of Australians,’’ Mr Reed said.

Ms Westacott said the BCA was presenting a carefully calibrated package of reforms that could be achieved incrementally.

“Pieced together they would overhaul Australia’s competitiveness and productivity, increase our participation in big global markets, and fundamentally drive stronger economic growth.

“If the Australian economy was to grow at its long-run average of 3.3 per cent a year rather than the status quo, after a decade each Australian would be $7,000 a year better off – and this sum would grow each year.

“The economy would be $200 billion bigger and an extra $50 billion of revenue would be raised – nearly the same amount as the entire annual defence budget, almost the cost of providing the aged pension each year, or the price tag of the planned nuclear submarine program purchase,’’ she said.

“We appreciate that governments across the country have started and in some cases are well progressed on many of these ideas.

“What we need now is coordination, alignment and urgency across the Federation and across business.’’

The BCA’s 10 policy levers for action and the big ideas for reform

A frontier economy – the cutting edge of existing and new industries

Introduce a reinvigorated and contemporary industry policy that strikes the balance between getting the fundamentals right, driving industries where we have a comparative advantage, and building the cross-economy capabilities needed to tap into the world's supply chains.

Effective overseas trade and global integration

Realise the full economic, trade and investment benefits from our proximity and deepening strategic ties, especially with India and Southeast Asia.

A tax system for the future

Undertake broad-based reform of the tax system to minimise distortions and increase incentives to invest, innovate and hire.

An agenda for microeconomic reform

Establish a five-year ‘ease of doing business’ agenda, including undertaking incremental reforms that together can make a big difference.

Energy and the road to net zero

The Australian Government and state and territory governments should commit to a detailed 10-year national Net Zero Roadmap based on a whole-of-system approach to decarbonising the economy to 2050.

Nurturing our people and skills

Education and skills: Australia needs to move away from its fragmented system of education, skills and training and move towards a coherent system of lifelong learning, that is flexible and responsive to a changing economy.

Migration: Move to a three-tier temporary labour migration approach.

Advancing the economic interests of women

Implement a 10-year roadmap with actions by government, business and others to lift the economic participation of women. A report card on progress should be released annually to coincide with International Women’s Day.

Social inclusion

Change the national model of social inclusion from one of ‘placement’ to ‘advancement’ to allow all Australians to reach their full work potential.

Efficient workplaces

Implement a workplace relations system that lifts performance, encourages flexibility, and allows wages to rise with productivity.

Effective government and better services

Prevent a looming catastrophe of unaffordable government service delivery by resetting fiscal sustainability and providing fit-for-purpose services.