$900m fund launched to raise productivity
Treasurer Jim Chalmers has unveiled a federal incentive fund to reverse Australia’s decades-long slide in economic efficiency.
States will receive a $900 million funding boost to enact pro-productivity reforms as the government seeks to turn around six decades of declining growth.
The National Productivity Fund, announced this week, will reward states and territories for implementing policies such as streamlining commercial planning regulations and modernising construction methods.
“It’s all about rewarding states with more revenue, where they deliver meaningful and measurable economic reforms,” Treasurer Jim Chalmers said in an address to economists in Sydney.
“There is no more important structural problem in our economy than productivity. No higher priority for reform. No more important ingredient in the higher living standards we all seek.”
The efforts to stimulate productivity come as Australia experiences “the most persistent deceleration since records began”, falling 10 places in OECD productivity rankings in the five decades to 2020.
According to the Productivity Commission, growth in the last full decade averaged just 1.1 per cent annually, less than half the rate achieved during the 1990s and the slowest rate of growth in six decades.
In 2022, Treasury also downgraded its long‑run annual productivity growth assumption from 1.5 per cent to 1.2 per cent.
It said the economy’s changing mix of industries meant more people were working in services industries where productivity typically grew more slowly.
Chalmers said the National Productivity Fund was part of a broader productivity agenda led by the Productivity Commission.
The agenda would include five major reform pillars: creating a more dynamic economy, building a skilled workforce, advancing digital technology, investing in clean energy transition and improving efficiency in healthcare and social services.
“This work will identify priority policies that will materially measurably boost productivity, especially in areas where we’re seeing big structural change,” Chalmers said.
The government was also implementing better institutional arrangements to help maximise the flow of capital, including the Future Made in Australia project.
Chalmers confirmed the central point of contact for investors looking to invest in the project would sit within the Treasury portfolio and have three key functions: prioritisation, investment concierge and regulatory facilitation.
“It will prioritise proposals representing transformational opportunities, using transparent and robust criteria,” he said.
“For selected projects, it will play a central role in co-ordinating approvals across government.”
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