Productivity Commission to push for corporate tax change, AI adoption
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The news: The Productivity Commission is primed to recommend the government implement a suite of changes to bolster productivity, including changes to the corporate tax system, incentives to reduce emissions and ideas to help Australian businesses “seize the data and digital technology dividend”.
In a scene-setting document released on Thursday evening, a week before it will unveil the first of five interim reports with detailed recommendations it will hand to Treasurer Jim Chalmers, the Productivity Commission emphasises the need to shift the dial on these critical areas in an uncertain world.
"The recommendations include ideas to lift business investment in new tools and technologies, embrace head-on the opportunities and challenges of the net zero transformation, unlock the potentially transformative power of data and digital technologies like artificial intelligence (AI), boost our human capital, and reshape the care economy to enable more efficient and higher-quality care," the document says.
The numbers: Boosting productivity growth from its current low levels back to the historic average would leave an adult Australian full-time worker $14,000 better off each year by 2035, according to the Productivity Commission.
In the past 10 years, labour productivity growth has been less than a quarter of the 60-year average, at under 0.4% a year since 2015.
The context: The federal government will hold an Economic Reform Roundtable in August, which has been described by Prime Minister Anthony Albanese as focused on driving productivity.
The Productivity Commission has been undertaking five inquiries that will feed into this roundtable. This includes: creating a more dynamic and resilient economy; investing in cheaper, cleaner energy and the net zero transformation; harnessing data and digital technology; building a skilled and adaptable workforce; and delivering quality care more efficiently.
In its release on Thursday evening, the Commission heavily referred to global instability as a reason tackling these issues has become more critical.
"Australians have entered a distinct period of economic uncertainty," it said.
"With these pressures now easing, Australians have turned a watchful eye to global markets as the second Trump administration reshapes world trade and international relations.
"Even before the 2024 United States election, shifting global power dynamics and heightened geostrategic competition were affecting economic activity in Australia and around the world."
What they said: Productivity Commission chair Danielle Wood said there was "no single policy change" that will guarantee prosperity and there needed to be "smart reforms across a range of areas to drive sustainable productivity growth".
"Bringing a growth mindset to policy decisions means elevating economic growth and its benefits. That doesn’t mean policy makers should ignore other objectives, but it does mean being clear-eyed about the trade-offs," Wood said in a media release accompanying the report.
Chalmers said there was "no quick fix" to productivity and the report made it clear the problem has been affecting Australia "for a couple of decades, and almost every comparable country has the same challenge". He said the research would provide input into the upcoming Economic Reform Roundtable.
"We’ve already got a substantial productivity agenda underway across technology, human capital, energy, care and competition, but we know there’s more to do," Chalmers said in a statement.
"The best way to strengthen our economy and make it more productive is to work through the issues in a methodical and considered way in collaboration with business, unions and the broader community," he said.
The sources: Productivity Commission media release and report, Treasurer media statement
