Productivity Commission must remain independent

Monday, 24 July 2023

It is crucial the Productivity Commission remains highly independent following Labor’s appointment of Wayne Swan’s former Chief of Staff and Treasurer Jim Chalmers’ old boss Chris Barrett to Chair of the Productivity Commission.

The Opposition was not consulted on this appointment and will scrutinise it extensively at Senate Estimates.

The test of Mr Barrett’s performance will be in whether he pursues genuine productivity reform or rubber stamps Labor’s union-led agenda that business is warning will take productivity further backwards.

Changes to the Productivity Commission won’t make up for the fact that labour productivity has collapsed by an historic -4.6 per cent over a year on the Treasurer’s watch.

Real action on productivity is essential so the next generation can enjoy a better quality of life than the one before it.   

The twin challenges of persistent inflation and sluggish productivity require a strategic and whole-of-government response.

Instead under Labor Australia’s economy is shuddering to a halt with Australia experiencing:

  • One of the highest core inflation rates amongst advanced economies
  • Economic growth at half the OECD average
  • Record collapses in labour productivity
  • Flatlining GDP per capita
  • The highest collapse in real wages on record
  • Higher spending, higher interest rates and higher taxes with an extra $185 billion of spending across two budgets and broken promises on taxes on super, franking credits, small businesses and sneaky increases to personal income tax through bracket creep.

The Productivity Commission has given a roadmap in its five-year review yet the government has buried it.  

Senate Estimates has been told that despite a year in office, the Treasurer and Prime Minister have not even met with the outgoing Productivity Commissioner to discuss the review. 

The Reserve Bank, business and Treasury have all been clear that productivity is the biggest challenge facing our economy.

The government has talked a big game on productivity to justify billions of extra expenditure yet the Productivity Commission has repeatedly warned the economic case for Labor’s off-budget funds was suspect in the current economic environment. 

Meanwhile Labor’s industrial relations reforms risk sending productivity backwards:

  • The e61 institute has made it clear that the government’s first tranche of IR reforms will harm productivity – warning Labor’s multi-employer bargaining changes will shortchange competition and stifle the growth of innovative firms.   
  • Australia’s biggest employers are now warning their second round of reforms are a “productivity killer” – Labor’s plan will only add to inflation and make productivity worse.
  • Labor’s abolition of the ABCC will add $47.5 billion of costs across our construction industry and economy according to independent modelling, at a time when the cost of housing is skyrocketing. 

The government needs a plan for productivity not friendly faces at the Productivity Commission.