Australia’s Productivity Commission has released the final reports from its five “pillars of productivity” inquiries, outlining 47 reform recommendations aimed at reversing the country’s long-running productivity slowdown and strengthening economic growth and wellbeing.
The reports, respond to stagnating productivity growth since 2016, which the Commission warned threatens future living standards. Productivity Commission Chair Danielle Wood said sustained improvement will require coordinated reforms rather than a single policy fix.
Among the most significant recommendations is a proposed overhaul of Australia’s corporate tax system to boost investment and economic dynamism. The Commission suggests a hybrid model combining a lower 20% company tax rate for small and medium-sized businesses earning up to $1 billion, a 28% rate for larger firms, and a 5% net cashflow tax for all companies. Modelling indicates the proposal could lift GDP by more than $13 billion, or about 0.7%, while remaining revenue neutral.
The Commission also calls for an ambitious, whole-of-government regulatory reform agenda, including measures to cut regulatory burdens by $10 billion. Deputy Chair Alex Robson said poorly designed regulation is a “handbrake on growth” and must better balance economic benefits and trade-offs.
Workforce development is another major focus. Recommendations include improving access to high-quality teaching resources, smoothing pathways for lifelong learning, and reducing excessive occupational licensing rules to help workers transition between jobs more easily.
In its digital economy report, the Commission highlights data and artificial intelligence as key productivity drivers, recommending a gap-based approach to AI regulation rather than sweeping new rules. It estimates effective AI adoption could unlock up to $116 billion in productivity gains over the next decade.
The inquiry also addresses productivity in care services, recommending greater investment in prevention and early intervention. A proposed $1.5 billion National Prevention Investment Framework could deliver net government savings within a decade.
Finally, the Commission emphasizes energy and climate policy, recommending a national emissions-reduction framework for electricity generation. A technology-neutral approach to new energy infrastructure could save up to $8 billion over 15 years while supporting net-zero targets.
The Commission said the reforms, taken together, aim to create a more dynamic, resilient and inclusive Australian economy.
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