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Australia must face monumental productivity challenge

  • Written by Business Council

The Productivity Commission’s interim report confirms that the productivity growth that drives real wages is languishing at 60-year lows, Business Council chief executive Jennifer Westacott said.

“This challenge is monumental because it is productivity that has overwhelmingly driven better living standards and higher wages for Australians since Federation.

“Productivity is about driving investment and innovation across the economy to do things better and more efficiently or doing new things all together.

“Productivity also drives down the cost of goods and services for consumers. For example, it is productivity gains that have driven down the work required to buy a loaf of bread – equivalent to about 4 minutes of work at the average wage today compared to about 18 minutes in 1901.

“Driving productivity means investing in technology to cut down on the hours nurses spend doing paper work or building new infrastructure that gets more products to lucrative export markets faster and more efficiently.

“To boost productivity we will need to make Australia a frontier nation at the cutting edge of wealth and value creation, attracting new investment, building new industries and strengthening powerhouse sectors.

“The Jobs and Skills Summit is a chance to lay the groundwork for sustained wages growth fuelled by productivity. As the Productivity Commission itself says, ‘almost all sustained increases in real wages are underpinned by improvements in labour productivity growth’.

“There is no silver bullet – we need to address critical labour shortages, build up skills; make it easier to get back into the workforce and make it much easier to do business in Australia.

“Just as we did at the height of the pandemic, we need to axe unnecessary red tape that makes it harder to attract investment and do new things.

“And we must urgently end the deadlock on workplace relations to fix the enterprise bargaining system that lets business and workers share the benefits of greater productivity.

“Higher productivity is the ticket to higher sustained wage growth for Australians.”
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