Australia’s long-term economic productivity is in a decline that risks leaving the average full-time worker $14,000 worse off annually by 2035. A report released by the Productivity Commission on Thursday night suggests that reversing this trend requires a shift toward a more dynamic business environment, specifically by reducing regulatory burdens and improving management capabilities.
Stagnant Productivity Trends
The national productivity growth rate has fallen from a peak of 1.8 per cent in the 2009-10 financial year to 0.8 per cent in 2023-24. Commissioner Alison Roberts described the current state of the economy as stagnant, noting that a healthy market relies on businesses that are constantly starting, growing, and adapting.
Did You Know? The Productivity Commission estimates that if Australian firms could match the management capability of their counterparts in the United States, national productivity could rise by 9.8 per cent.
Boards spend more time on compliance
The report highlights that business boards are increasingly consumed by administrative tasks. In 2025, boards reported spending 55 per cent of their time on compliance, a significant increase from the 24 per cent reported a decade ago. Commissioner Roberts noted that businesses often struggle to identify which specific rules apply to them or where to find authoritative guidance.
Technological adoption also remains a point of concern. Data from the Australian Bureau of Statistics indicates that only 12 per cent of Australian businesses utilized artificial intelligence in their workforce during the 2024-25 period, trailing the 20 per cent adoption rate seen in the US. Commissioner Stephen King observed that while Australian firms are skilled at identifying potential opportunities, they are less effective at evolving to capitalize on them.
Commission recommends tell us once approach
The Productivity Commission recommended a “tell-us-once” approach to regulation, which would eliminate the need for businesses to repeatedly provide identical information to multiple government agencies. The report also identified that “one-size-fits-all” lending practices are disproportionately hindering commercially viable businesses led by women or Aboriginal and Torres Strait Islander people.
Andrew McKellar, chief executive of the Australian Chamber of Commerce and Industry, welcomed the push for deregulation but argued that the report failed to address critical issues regarding tax and industrial relations. Meanwhile, the Coalition has vowed to rewrite five specific laws, including a plan to reduce the construction code from 2000 pages to 200.
Government Response to Economic Challenges
Treasurer Jim Chalmers stated in October that he takes the productivity challenge seriously, pointing to the broadest productivity package included in the recent budget in at least three decades. He cautioned that the results of these measures would not be immediate, noting that a package announced in May requires time to be implemented across state and federal levels.
Lending processes hinder diverse businesses
Why are some businesses struggling to secure funding?
The report found that “one-size-fits-all” lending processes present a barrier for commercially viable businesses, particularly those led by women or Aboriginal and Torres Strait Islander people.
What does the “tell-us-once” approach entail?
It is a proposed reform designed to simplify administrative requirements, ensuring that businesses do not have to repeatedly provide the same information to different government agencies.
What is the link between productivity and the average worker?
Productivity is tied to the amount of value produced from available resources, which directly correlates to wages, the affordability and quality of goods, and overall economic growth. Without a reversal of current trends, the Productivity Commission estimates the average full-time worker faces a potential $14,000 annual loss by 2035.
Will the current government’s legislative packages provide the necessary shift to restore economic dynamism, or are deeper structural changes required?
Worth a look