Grattan: Galahs Chat on Productivity—Can Labor Act?
Former prime minister Paul Keating famously used to say the resident galah in any pet shop was talking about micro-economic policy. These days, if you encounter a pet shop with a galah, she’ll be chattering about productivity.
Productivity is currently the hot topic for a conversation on economic reform. Australia, like many other countries, has a serious problem with it. Our productivity hasn’t significantly increased for more than a decade (apart from a temporary spike during the pandemic).
Now Treasurer Jim Chalmers has named productivity as his priority for Labor’s second term; assistant minister Andrew Leigh, part of the government’s economic team, has had it inserted into his title; the Productivity Commission has put out 15 potential reform areas for discussion, and Prime Minister Anthony Albanese has announced a roundtable to canvass the way ahead.
The roundtable appears to be a prime ministerial initiative. Announcing it at the National Press Club on Tuesday, Albanese made a point of saying he had asked Chalmers to convene it. Perhaps it’s a case of the prime minister emulating his forerunner Bob Hawke, with his penchant for summits, while Chalmers seeks to be a contemporary Keating, as he searches for reforms to promote.
It would be a major achievement if people were able to remember the second-term Albanese government for paving the way for a significant lift in Australia’s productivity. It would probably also be an economic and political miracle.
Let’s never knock a summit, but let’s not be taken in by the suggestion that the planned August meeting, involving employers, unions and the government, will mark some breakthrough moment. Business representatives are approaching it with a degree of cynicism; they saw the 2022 jobs and skills summit as preparing the ground for the new government to meet union demands.
This summit is expected to have fewer participants than the 2022 meeting, and may be briefer. Albanese described it as “a more streamlined dialogue than the jobs and skills summit, dealing with a more targeted set of issues”. Chalmers will announce more details next week. We can expect the government will package a collection of initiatives at least for further work, and perhaps a few for early action.
While many stakeholders give lip service to improving productivity, there are huge obstacles to actually doing so.
There’s perennial talk about tax reform – from business and economists, rather than the government. But serious change produces winners and losers, and having “losers” has become a political no-no, especially when there is not enough money to compensate them.
The housing crisis could be eased, with more homes built faster, if there were less onerous regulations, notably at state and local level. Governments are working around the edges of this, but attempting to seriously slash regulation immediately runs into opposition from those who, variously, argue that will harm city-scapes, the environment, safety or the like.
Red tape hampers big projects, but interest groups concerned about fauna, flora or the climate defend extensive hurdles and appeals processes as important for other priorities.
We’d be more productive if people with skills (whether immigrants or those moving between states) faced fewer complexities in getting their credentials recognised. But critics would point to the risk of underqualified people getting through.
Regulations are both barriers and protections. Whether you see particular regulations as negative or positive will depend where you are coming from. Less regulation can enhance productivity – but in certain cases the trade-off can be less protection and/or more risk. We have, for good or ill, become a more risk-averse community.
Employers say various industrial relations laws and regulations restrict changes that could boost productivity. A Labor government interlocked with the union movement is going to listen to its industrial base on that one. Asked on Tuesday whether his message to business groups going to the summit was, “don’t waste your brea