Per Capita Submission to the Productivity Commission’s Inquiry: Australia’s Future Prosperity

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9 December 2016

The  Productivity Commission is holding an inquiry into Australia’s productivity performance and provide recommendations on reform priorities.

It is the first in a regular series, done at five-yearly intervals, to provide an overarching analysis of where Australia stands in terms of its productivity performance, and to develop and prioritise reform options to improve the wellbeing of Australians by supporting greater productivity growth.

Per Capita applauds the government for commencing regular productivity reviews. We believe that a combined and integrated focus on productivity, inequality and sustainability is essential to ensure sustained high quality of life for the Australian population. Per Capita endorses the broad scope of this review, in particular the inclusion of non-market areas, domestic productivity and inequality.

We would like to have seen a greater emphasis on environmental sustainability in the scope and terms of reference for this review and an explicit consideration of the impact on quality of life of productivity enhancing policies.

The distributional impacts of future productivity improvements are extremely important and will be largely determined by the relative power of capital and labour. Government policy has a role to play in influencing distributional outcomes, not only through the tax and transfer system but through the structural and legislative systems that influence the power balance between capital and labour.

In the submission, Per Capita puts forward the following ideas for policy reform:

  • Tax economic rents – encourage productive investment and discourage rent-seeking – current policy that disproportionately favours asset price speculation over productive investment should be reviewed. Obvious candidates are negative gearing and the concessional treatment of capital gains but it’s possible to go much further than that.
  • Improve educational outcomes, particularly in critical thinking and problem solving – we need a workforce that is flexible.
  • Reduce standard working hours – there is increasing evidence that the forty-hour week is too long for optimal labour productivity.
  • Address age discrimination in employment
  • Develop a national strategy to adapt to the changing nature of work driven by artificial intelligence and robotics.
  • Ensure equity of access to communications technology and broadband and mobile networks.
  • Encourage the more efficient use of existing housing stock – there are too many inefficiencies in our use of housing stock created by poor government policy.

 

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