Advancing Prosperity

• Preliminaries: Cover, Copyright and publication detail, Letter of transmittal, Terms of reference, Acknowledgements, Contents and Foreword
• 1. An agenda to lift Australia’s productivity
  • 1.1 Australia faces a productivity predicament
  • 1.2 There are headwinds to faster productivity growth
  • 1.3 A policy agenda for a more productive Australia
  • 1.4 The shared benefits of a productivity agenda
• 2. Roadmap
  • 2.1 The prioritisation framework
  • 2.2 The prioritised reforms
  • 2.3 Implementation plans
• 3. Recommendations linked to reform directives
  • Building an adaptable workforce: education
  • Building an adaptable workforce: migration
  • Building an adaptable workforce: occupational licensing
  • Building an adaptable workforce: workplace relations and platform work
  • Harnessing data, digital technology and diffusion
  • Creating a more dynamic economy
  • Lifting productivity in the non-market sector
  • Securing net zero and adapting to a changing climate at least cost
• A. Inquiry conduct and participants

Printed copies of this volume can be purchased from Canprint Communications.

• Preliminaries: Cover, Copyright and publication detail, Contents and Preface
• 1. Productivity growth and prosperity
  • 1.1 Productivity and prosperity go hand in hand
  • 1.2 A micro lens on productivity growth
  • 1.3 The aggregate picture
  • 1.4 Productivity: what lies beyond the aggregates?
• 2. Forces shaping Australia’s productivity challenge
  • 2.1 Australia’s recent productivity performance
  • 2.2 Forces shaping future productivity growth
• A. Productivity and how it is measured
• Abbreviations
• References

Printed copies of this volume can be purchased from Canprint Communications.

• Preliminaries: Cover, Copyright and publication detail, Contents and Preface
• 1. Competitive and dynamic markets
  • 1.1 Competition, dynamism and productivity
  • 1.2 The state of competition
  • 1.3 The regulation of competition
  • 1.4 Competition, dynamism and the expansive footprint of government
• 2. A better environment for productive investment
  • 2.1 The investment challenge
  • 2.2 Taxation, investment and productivity
  • 2.3 Improving the business environment for private investment
  • 2.4 Ensuring efficient public investment
• 3. Openness to trade and foreign investment
  • 3.1 Introduction
  • 3.2 Building trade resilience
  • 3.3 Addressing barriers to trade in goods
  • 3.4 Avoiding undue constraints to foreign direct investment
  • 3.5 Facilitating trade in services
• Abbreviations
• References

Printed copies of this volume can be purchased from Canprint Communications.

• Preliminaries: Cover, Copyright and publication detail, Contents and Preface
• 1. Use of digital technology and data in the Australian economy
  • 1.1 Economic gains from using technology and data
  • 1.2 International comparisons on technology and data use
• 2. Potential barriers to adopting new technologies and data
  • 2.1 Business-level barriers to digital and data uptake
  • 2.2 Broader limitations in the digital and data environment
• 3. Targeting government investments and policy priorities
  • 3.1 Investing in regional digital infrastructure
  • 3.2 Creating new data sharing and integration opportunities
  • 3.3 Developing digital, data and cyber security skills
  • 3.4 Balancing cyber security and growth
  • 3.5 Supporting ethical use of technology and data
  • 3.6 Coordinating the policy and regulatory environment
• A. Modelling business technology adoption
• B. Stylised simulations of economy-wide effects
• Abbreviations
• References

Printed copies of this volume can be purchased from Canprint Communications.

• Preliminaries: Cover, Copyright and publication detail, Contents and Preface
• 1. The case for strengthening the diffusion of innovation
  • 1.1 A focus on diffusion
  • 1.2 Innovation and diffusion in Australia
  • 1.3 The policy levers for diffusion are different from those for novel innovation
• 2. Enabling innovation diffusion in Australia
  • 2.1 An enabling environment for diffusion of new knowledge and technologies
  • 2.2 Facilitating the diffusion of innovations developed overseas
  • 2.3 Diffusion through human capital
  • 2.4 Collaboration and networks can catalyse innovation diffusion
• 3. Innovation and diffusion in government services
  • 3.1 Public sector innovation and diffusion occurs, but is variable
  • 3.2 There are major obstacles to innovation and diffusion that need to be reformed or managed
  • 3.3 What is to be done?
• A. Stylised simulations of economy-wide effects
• Abbreviations
• References

Printed copies of this volume can be purchased from Canprint Communications.

• Preliminaries: Cover, Copyright and publication detail, Contents and Preface
• 1. Managing the climate transition
• 2. Physical impacts
• 3. Promoting efficient adaptation
  • 3.1 Helping to promote informed adaptation decisions
  • 3.2 Avoiding policies that discourage private adaptation decisions
• 4. Productivity-enabling emissions reductions
  • 4.1 The implications of Australia’s recent approach to emissions abatement
  • 4.2 Foundational elements of Australia’s emissions abatement tool-kit
  • 4.3 Reforming Australia’s Safeguard Mechanism
  • 4.4 Promoting the integrity of Australia’s offsets arrangements
  • 4.5 Distributional considerations
  • 4.6 The role of other measures
  • 4.7 Public support for research and development
• A. Indirect carbon price estimation
• Abbreviations
• References

Printed copies of this volume can be purchased from Canprint Communications.

• Preliminaries: Cover, Copyright and publication detail, Contents and Preface
• 1. Improving productivity in a challenging labour market
  • 1.1 The matching and use of skills in the labour market
  • 1.2 Where we have focused
• 2. Improving productivity through migration
  • 2.1 Policy objectives and trade-offs
  • 2.2 Strengths and weaknesses of the current system
  • 2.3 A better targeted migrant intake
  • 2.4 Abolish business visas
  • 2.5 Replace skill lists
  • 2.6 Using income levels as benchmarks and thresholds
  • 2.7 Reforming the points-based system
  • 2.8 Meeting employment needs in human services and care work
  • 2.9 Temporary migration and pathways to permanent residency
  • 2.10 Avoiding backlogs where possible
  • 2.11 Removing barriers that migrants face in the labour market
• 3. Occupational licensing and registration
  • 3.1 Licensing and productivity
  • 3.2 Is licensing the best way of improving safety?
  • 3.3 Addressing boundary issues and scope of practice
  • 3.4 Laying the foundations for better occupational licensing design
• 4. Effective workplace relations
  • 4.1 An evolving workplace relations environment
  • 4.2 Awards are growing in policy significance
  • 4.3 More efficient enterprise bargaining
• 5. Platform work and the gig economy
  • 5.1 Introduction
  • 5.2 The upsides of platform work
  • 5.3 Regulatory challenges relating to minimum pay and conditions in Australia
  • 5.4 Improving dispute resolution between platforms and workers
  • 5.5 Platform work and safety
• A. Stylised simulations of economy-wide effects
• Abbreviations
• References

Printed copies of this volume can be purchased from Canprint Communications.

• Preliminaries: Cover, Copyright and publication detail, Contents and Preface
• 1. The value of human capital
  • 1.1 Education is vital for productivity
  • 1.2 What skills are necessary for Australia’s future workforce?
  • 1.3 The education sector context
• 2. Building productivity in schools
  • 2.1 Lifting productivity in a stretched system
  • 2.2 Working smarter to improve student outcomes
  • 2.3 Shaking up how schools operate
• 3. Investing for future skill needs
  • 3.1 Meeting demand for a more educated workforce
  • 3.2 Improving governments’ subsidy allocations
  • 3.3 Setting prices based on efficient costs
  • 3.4 Harmonising loan settings to increase access to tertiary education
  • 3.5 A culture of lifelong learning for an agile workforce
• 4. Boosting learning outcomes for tertiary students
  • 4.1 How big are the quality problems facing higher education?
  • 4.2 Leveraging information to promote quality
  • 4.3 Rewarding and spreading best practice teaching
  • 4.4 Supporting retention and completion
  • 4.5 Teaching for adaptive skill needs in VET
• A. A mixed story — performance of higher education
• B. Stylised simulations of economy-wide effects
• Abbreviations
• References

Printed copies of this volume can be purchased from Canprint Communications.

• Preliminaries: Cover, Copyright and publication detail, Contents and Preface
• 1. Model structure
  • 1.1 Individual group decision process
  • 1.2 Industry production processes
  • 1.3 Government decision process
  • 1.4 Investment and capital processes
  • 1.5 The rest of the world
  • 1.6 Model structure limitations
• 2. Data sources and parameters
  • 2.1 The social accounting matrix
  • 2.2 Expenditure, factor incomes, and income tax by individual group
  • 2.3 Normalised hours
  • 2.4 Other individual group values
  • 2.5 Elasticities
• 3. Simulations and output variables
  • 3.1 Summary of simulations
  • 3.2 Aggregate output variables
• 4. Sensitivity testing
• 5. Model equations
• Attachment A — Review of ‘whole of economy modelling’
• Abbreviations
• References

Printed copies of this volume can be purchased from Canprint Communications.

Productivity Inquiry sets out priorities to advance prosperity

If Australia is to continue to grow its economy and increase individual prosperity, productivity policy should focus on key emerging trends like the shift towards service industries, according to the final report of the Productivity Commission’s 5-year Productivity Inquiry.

“Australia’s economy has changed. Almost 90% of Australians now work in service industries, including education, health, hospitality, retail and finance,” Productivity Commission Chair, Michael Brennan said.

“It has traditionally been difficult to lift productivity in these sectors. But we are not alone. Economies around the world are grappling with the same issues. There is no easy answer, but we need to address this challenge to secure Australia’s future prosperity.”

The Commission’s 5-year Productivity Inquiry lays out a comprehensive reform agenda.

“Our report shows how productivity policy is central to a modern economy,” Mr Brennan said. “Through significant consultation and investigation, the Productivity Commission has made a series of recommendations we believe will stack the odds of productivity growth in Australia’s favour.”

“Concentrating on five key themes can make a real difference,” Mr Brennan said. “These are: building an adaptable workforce; harnessing data, digital technology and diffusion; creating a more dynamic and competitive economy; efficiently delivering government services; and securing net zero emissions at least cost.”

To drive productivity growth, a services economy requires a highly skilled and adaptable workforce. This requires better teaching and innovation in schools, vocational education and training, and universities. Encouraging more tertiary education and lifelong learning can help workers obtain the skills they need for a modern economy. And more effective use of skilled migration will help boost Australia’s human capital.

“Innovation can help businesses and governments deliver better services or operate more efficiently. The uptake of digital technologies – accelerated to some extent during the pandemic – holds significant promise for lifting business productivity. The potential of data sharing remains relatively untapped and increased utilisation will facilitate innovation that lowers costs while improving the quality of service delivery for consumers.”

Innovation will also help drive the transition to net zero. “Australia is decarbonising and while this effort is not without its economic ramifications, it is our contribution to global efforts to reduce the costs of unmitigated climate change. It will be important to provide the right price incentives to get to net zero at least cost,” Mr Brennan said.

“Over the past 35 years in Australia, the expansion of employment in the services sector has been mainly in government subsidised and regulated services, like health care and social assistance. Productivity in these areas can be hard to measure and achieve. In many cases, the goal will be to improve quality rather than reducing cost, but it remains important that we pursue productivity improvements in these areas. For example, Australian governments are reforming healthcare funding to improve the efficacy and cost effectiveness of public expenditure. We can also better diffuse best practice and reduce clinical variation in treatment.”

“The reform recommendations put forward by the Commission today will help Australia overcome its productivity predicament.”

For a full copy of the 5-year Productivity Inquiry: Advancing Prosperity, please visit the Commission’s website: www.pc.gov.au

Media requests

Media team – 02 6240 3330 / media@pc.gov.au