This week the Albanese Government will release the 2023 Intergenerational Report, providing a longer‑term view of our economy, our budget and our society over the next 40 years and helping to shine a light on the forces shaping our future.
It’s all about ensuring we make the major trends and transitions – from globalisation to fragmentation; from hydrocarbons to renewables; from IT to AI; from younger to older populations; and the changes in our industrial base – work for us, not against us.
This is also the thinking behind a welcome contribution from the Business Council of Australia this week.
While of course we don’t agree on everything, there is strong alignment between our agenda and many of the BCA’s insights.
The Albanese Government is already making progress in many if not most of the areas identified by the BCA – whether it’s building stronger institutions, boosting housing supply, investing in human capital or maximising the opportunities of the energy and digital transformations under way.
What unites us is the need to turn around Australia’s longstanding sluggish productivity performance so we can lift wages and living standards.
While poor productivity has been a problem across the advanced world for some time, the problems in Australia have been compounded by the missed opportunities and messed‑up priorities we saw during our predecessor’s wasted decade.
Over the 10 years to 2020, our average annual labour productivity growth was the slowest in 60 years, falling to just 1.1 per cent compared to 1.8 per cent over the 60 years to 2019‑20.
The Intergenerational Report that we will release on Thursday will illuminate the path forward.
It emphasises that Australia’s future productivity performance will depend on how governments, business and the broader community respond to some of the big structural changes in the economy like the impact of climate change, growth in the care economy and the spread of digital technology.
The Albanese Government is rising to the productivity challenge, but even with the best intentions, this productivity challenge has been building for some time and will take time to turn around as well.
The IGR identifies the key areas where we can make the biggest productivity gains in the next 40 years including economic dynamism and competition; investing in new data and digital innovations like cloud computing, AI and machine learning; investing in a better skilled and more adaptable workforce; and embracing the net zero transformation.
We have a big, broad and ambitious productivity agenda that is focused on five key pillars.
First, we are building dynamism and resilience in our economy, including through refreshing and renewing our economic institutions, promoting innovation and boosting competition, including in the payments system.
Second, we are investing in data and digital infrastructure including Digital ID and the National Broadband Network, helping more businesses adopt new digital technologies and investing in the quantum and artificial intelligence sectors.
Third, we are building a more skilled and adaptable workforce through reinvigorating foundation skills, improving access to tertiary education, and establishing a Universities Accord and a new National Skills Agreement.
Fourth, we are creating a more sustainable and productive care economy that delivers high quality services and supports well‑paid jobs. This is supported by our investments in health and aged care, the NDIS, early education and care, and investments in infrastructure platforms which can support more efficient and quality essential services.
And lastly, we are powering the net zero transformation by investing more than $40 billion in cleaner, cheaper energy – including $4 billion in the May Budget to help transform Australia into a renewable energy superpower.
These are long‑term investments in our productivity with long‑term payoffs.
And at their core, these investments are about investing in people: their skills, the infrastructure and technologies that help them achieve more at work, and an economic environment that is dynamic and enables the most productive firms to grow.
We know there’s no switch you can flick to immediately turn things around after a decade of neglect.
Ultimately boosting productivity is about increasing our nation’s prosperity, boosting wages and lifting living standards over time.
We know we won’t get there through scorched earth industrial relations or by making people work harder and longer for less, but with smart investments in their skills and capabilities, innovation, and technology.
The Intergenerational Report makes the same important point that the BCA is making this week – that to build a better, more prosperous and productive economy that creates more opportunities for more Australians, it’s essential that we work together.
In many ways, that is the Albanese Government’s reason for being.
After a decade of division, drift and dysfunction, we are bringing people together to address the big challenges we face in our economy – and lifting productivity is amongst the biggest.
As the Seize the Moment report says, “the future is in our hands”.
We’ll continue to work closely with the BCA, other organisations and the broader community to make our economy more productive and lift living standards for more of our people.