Unshackling productivity: the reform blueprint Australia needs

Australia’s economic story is at risk of losing its happy ending

For almost five decades, we have been an outlier among advanced economies: fast-growing, resilient, and prosperous. Reforms of the 1980s and 1990s, deregulating finance, floating the dollar, liberalising trade, reforming labour markets, created an environment in which productivity and prosperity thrived. The resources boom then turbocharged this momentum into the 2000s.
But as the Centre for Independent Studies (CIS) has shown, that era is over.

The Productivity Slump

Since the global financial crisis, Australia’s productivity growth has slowed sharply. Real wages have stagnated. Government spending has ballooned. Debt is climbing towards $1.2 trillion — locking future generations into paying for today’s promises. CIS has called this what it is: a productivity problem. In our major report The Productivity Problem, we showed how declining productivity growth undermines not only economic output, but also the living standards and opportunities available to every Australian. Prominent economist Jim Cox has explained that
productivity is not about working harder, but about working smarter, producing more with the same resources. Without productivity growth, higher wages and better services, prosperity simply cannot be achieved

A Reform Blueprint

Cox’s paper Addressing Australia’s Productivity Problem goes further, setting out a detailed reform program. At its heart is a Charter of Regulatory Effectiveness (CORE), a legislative safeguard against the unchecked growth of red tape. With 356,000 Commonwealth regulations on the books, Australia’s regulatory burden is among the heaviest in the world. CORE would require regulators to review and prune outdated rules, measure the impact of regulations on productivity, and face accountability for poor performance. Alongside regulatory reform, Cox calls for renewed investment incentives. This means restoring fiscal credibility so that governments do not crowd out private capital, cutting corporate taxes to attract investment, and creating policy certainty that encourages innovation.

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