The recommendations form the basis of a National Productivity Policy (NPP) to drive a sustained improvement to Australia’s productivity so that the nation can realise ongoing economic growth.
Reform agenda for an open economy
To remain competitive and economically strong, Australia will need to adjust to economic changes taking place now – and in the future – to ensure we have a knowledgeable, productive workforce and strong, innovative industries. CEDA’s research outlines a reform agenda that will address these concerns, and sustain Australia’s international competitiveness and productivity into the future. That reform agenda embraces economic flexibility, incentivising innovation and developing the nation’s human capital.
The flexibility of Australia’s economy underpins the nation’s ability to respond to changing domestic and/or international circumstances. To improve its economic flexibility, Australia needs to initiate a series of microeconomic reforms to remove rigidities in the economy, address inefficiencies and uncompetitive elements of the tax system, reform the Federation, and adopt processes to deliver suitable levels of infrastructure.
Along with a competitive environment that in itself provides incentives to become more productive, the capacity to innovate and to adopt innovations quickly is essential to raising productivity. Australia has tended to derive its comparative advantage from other sources in the past, so it will be a challenge for the nation to develop vibrant hubs of innovation. There is also evidence of a lack of management innovation in Australian small and medium enterprises (SMEs), relative to those in northern hemisphere advanced economies.
Capability and workforce development
A nation’s most valuable resource is its people – its human capital – and how well it performs in productivity and raising living standards depends critically on ensuring that their capabilities and agility are developed to their full potential, and that we have adaptive and consultative workplaces. While Australia has had relatively high levels of participation and employment in recent times, there are segments of the community where skill development and participation are poor.
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