16 September 2016
Media Release - #2016099, 2016

Turnbull Government initiates five yearly inquiry into Australia’s productivity performance

 

The Turnbull Government has tasked the Productivity Commission to undertake five yearly inquiries into Australia’s productivity performance and provide recommendations on productivity-enhancing reform.

Improving Australia’s economic performance and living standards depends on us working smarter and more efficiently. Put simply, productivity is about producing more goods and services with the same level of resources.

Productivity growth will be the number one driver of future income growth.

The Turnbull Government is enhancing Australia’s productive potential by implementing reforms that promote competition and improve the tax system, supporting innovation and entrepreneurship, negotiating new trade agreements, investing in infrastructure and reducing regulatory burdens.

However, all Australian governments must keep identifying and supporting future sources of productivity enhancements to drive growth.

That is why the Turnbull Government has released the terms of reference for the first in a series of five-yearly reviews into Australia’s productivity performance.

The inquiry will identify opportunities to enhance Australia’s performance giving consideration to the implementation of recent reforms.

We need to make sure that our policy settings can support productivity growth by ensuring that the economy is flexible and is able to adapt in the face of current and future economic challenges and opportunities.

This inquiry represents a new frontier in advice for the Productivity Commission by allowing it to identify priority reform areas across all sectors of the economy. It will complement the Commission’s usual approach of inquiring into a single sector or area of government policy. 2

This new process will complement the Intergeneration Report (IGR) initiative introduced by Treasurer Costello by providing a regular and accountable process that puts forward policy answers to the questions that are posed forward by the IGR.

The Productivity Commission is due to report to Government within 12 months. Information will be available on the Productivity Commission’s website – www.pc.gov.au


TERMS OF REFERENCE

PERIODIC INQUIRY OF AUSTRALIA’S PRODUCTIVITY PERFORMANCE

I, Scott Morrison, Treasurer, pursuant to Parts 2 and 4 of the Productivity Commission Act 1998, hereby request that the Productivity Commission (the Commission) undertake an inquiry into Australia’s productivity performance and provide recommendations on productivity-enhancing reform. This inquiry will be the first of a regular series, undertaken at five-yearly intervals, to provide an overarching analysis of where Australia stands in terms of its productivity performance.

Background

Productivity growth is the main long-term driver of growth in Australian incomes and living standards.

Governments have an important influence on productivity growth, including through policies and regulations that affect investment in human and physical capital and the functioning of markets, including with respect to trade, competition and other regulatory constraints and incentives.

Policy settings can support productivity growth by ensuring that the economy is flexible, able to adapt in the face of economic challenges and opportunities, and imposes the least cost in achieving governments’ policy objectives.

It is particularly important at present that policy settings facilitate structural change and productive investment in the economy to support its transition from the resources investment boom, and promote its efficiency and competitiveness given population ageing and the evolving global economy.

The Commission will undertake an inquiry of Australia’s productivity performance and make recommendations, as necessary to support productivity growth. This task will be undertaken every five years.

Scope of the Inquiry

The Commission is to review Australia’s productivity performance and, in the light of its findings, make recommendations to assist governments to make productivity enhancing reforms.

Without limiting related matters on which the Commission may report, its report to the Government should:

1. analyse Australia’s productivity performance in both the market and non-market sectors including an assessment of the settings for productive investment in human and physical capital and how they can be improved to lift productivity;

2. examine the factors that may have affected productivity growth, including an assessment of the impact of major policy changes, if relevant; and

3. prioritise potential policy changes to improve Australian economic performance and the wellbeing of Australians by supporting greater productivity growth.

The Commission should have regard to other current or recent reviews commissioned by Australian governments relating to Australia’s productivity performance such as the Harper Competition Policy Review and include comparisons of Australia’s productivity performance with other comparable countries.

The Commission should support analysis with modelling where possible and qualitative analysis where data is not available and this is appropriate.

Process

The Commission should consult widely and undertake appropriate public consultation processes, accepting public submissions.

The Commission should consult with Commonwealth, state and territory governments.

The final report should be provided to the Government within 12 months of receipt of these terms of reference.

The Hon. Scott Morrison MP