Ten reform areas, but sparse detail, emerge from talkfest on how to improve productivity and housing supply
Over the past three days, experts and stakeholders from the cross section of Australian enterprise descended on Canberra to pitch their ideas on how to fix the country’s productivity crisis.
Labor Treasurer Jim Chalmers (pictured, centre) and Prime Minister Anthony Albanese (pictured, right) heard from Reserve Bank of Australia (RBA) Governor Michele Bullock (pictured, left), Danielle Wood, Chair of the Productivity Commission, Aruna Sathanapally, chief executive of the Grattan Institute, and representatives from the Council of Small Business Organisations Australia (COSBOA), to name a few.
In the lead up to the summit, the government received recommendations from the likes of Commonwealth Bank and the Mortgage and Finance Association of Australia (MFAA) and the Australian Council of Trade Unions (ACTU).
They all, obviously, had their own vested interests to pursue and their thoughts on how to improve the economy differed.
The ACTU, for instance, demanded higher wealth taxes, while the MFAA pleaded with the government to abolish capital gains tax and stamp duty.
There was a general consensus from most participants that reducing red tape should be a priority going forward, particularly in the housebuilding sector. But that is likely to come with some tax changes that won’t make everyone happy.
To speed up housing approvals, Chalmers indicated that the government will focus on several initiatives, including recognising international qualifications so skilled workers are not required to retrain in Australia, creating more opportunities for prefabricated and modular construction, and reviewing the superannuation fund performance test – which some believe discourages investment in housing.
Chalmers also spoke of balancing the current tax system more fairly towards younger generations.
“I think our tax system is imperfect, and one of its most troubling imperfections is best seen through an intergenerational lens, which is why we take our responsibilities to the coming generations seriously,” Chalmers said.
While no concrete pledges were made, the likely candidates are superannuation funds, family trusts and the capital gains tax discount. Chalmers spoke of achieving a "fair go" for working people; that would logically come at the expense of these wealth taxes.
However, Chalmers also indicated he is willing to lessen the tax burden on businesses in the name of productivity and investment. COSBOA has recommended cutting the company tax rate to 20% for small businesses.
It will certainly require big-picture thinking and not band-aid solutions, for the challenges are immense.
Preliminary results from ScotPac’s September SME Growth Index reveal that 21% of small and medium-sized enterprises (SMEs) cite rising payroll costs and a lack of innovation as key obstacles to productivity.
The impact is especially pronounced among metropolitan businesses – which generate the bulk of Australia’s GDP – with 24% experiencing wage pressures related to productivity issues, compared to just 14% of their regional counterparts.
The report identified delays in recruitment (16%), a reduced capacity to respond swiftly to change (14%), decreased profitability (13%), and a drop in overall competitiveness (8% overall, but up to 16% for regional businesses) as major productivity barriers.
As the roundtable concluded, COSBA sounded optimistic of the “clear acknowledgement of the small business compliance burden and participants were broadly receptive to COSBOA’s calls for small business impact statements to form part of regulatory impact assessments”.
In the meantime, amid ongoing housing and productivity crises, Labor has emerged from the roundtable with 10 key reform areas. They will require ambition and a lot of risk-taking to make the roundtable anything more than an elaborate office meeting.
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Progressing towards a single national market and modernising the federation
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Simplifying trade and reforming tariffs
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Improving regulation and reducing regulatory clutter
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Accelerating approvals in national priority areas
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Increasing the speed and volume of home construction
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Making artificial intelligence a national priority for Australia
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Attracting capital and deploying investment
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Building a skilled and adaptable workforce
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Creating a better tax system
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Modernising government services
