Australia’s economy can expand at a faster pace if governments regain the “growth mindset” that has been absent from decision-making for far too long, said Danielle Wood, chair of the nation’s Productivity Commission.
“Governments must embed the importance of growth in every decision they make,” Wood said in a speech today that previewed this week’s economic reform roundtable.
“This means engaging with trade-offs, better program delivery and design, and the ‘boring but important work’ of reducing administrative burden.”
Danielle Wood, chair of the Productivity Commission, during an address to the National Press Club of Australia in Canberra.Credit: Alex Ellinghausen
The three-day roundtable begins tomorrow and comes at a time when Australia’s productivity performance lags most of the developed world. Treasurer Jim Chalmers is hoping to reverse that trend by bringing together business leaders, labour unions, government officials and other experts to focus on three key themes: resilience, productivity and budget sustainability and tax reform.
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The major drivers of Australia’s economic outperformance in the past few decades have begun to wane — key among these being China’s massive demand for minerals. Australia’s central bank last week downgraded its assumption for productivity growth to 0.7 per cent, compared to a long-term average of 1.6 per cent.
As a result, the Reserve Bank also revised Australia’s potential growth rate to 2 per cent from around 3 per cent two decades ago.
In her speech at the National Press Club today, Wood said she worried for Australians born in the 1990s who hit the job market in the 2010s when economic growth was slowing. They are the first generation not to earn more than those born a decade before, she said, adding that they will also bear more of the cost of addressing climate change as well as an ageing population.
Wood pointed to a decline in bipartisanship, the influence of vested interests and the 24-7 media cycle among factors that have driven a decline in productivity. Importantly, she also highlighted that reforms now are more complex to design and implement than they were in the 1980s and 1990s.
“But I think there is another reason as well,” Wood said. “Growth has simply fallen down the list of priorities in policymaking.”
Bloomberg