For wages to increase and living standards to be maintained there must be a new wave of productivity growth, Treasurer Scott Morrison argues.
Extending corporate tax cuts to all businesses was “vital”, and the government was committed to a $75 billion infrastructure agenda to drive investment and wages, but it wouldn’t be enough on its own.
Mr Morrison says if Australia maintains the 1.8 per cent rate of productivity growth seen in the past five years it won’t be enough to offset the expected slowdown in workforce participation from an ageing population.
“We need growth of around 2.5 per cent to maintain the growth in our living standards,” he will tell an economic conference in Canberra on Tuesday.
Speaking about the first five-yearly review into productivity, the treasurer said the Productivity Commission report provided a direction rather than a specific ‘to do’ list.
“No one change is sufficient,” he will say.
The report calls for a more integrated and patient-centred healthcare system to create more healthier workers.
It calls for a more proactive education system that supports better teaching to foster more proficient, resilient and adaptive workers.
Ahead of his speech, Mr Morrison said the last big shift in productivity was pre-technological advances such as the iPhone and the “cloud”.
“The healthier and the more proficient we are in these things the more productivity we will be,” he told ABC radio.
The commission estimates the economic benefits from a health system reboot alone could be worth up to $200 billion over the next 20 years.
Mr Morrison insists this is not about cutting health budgets but “doing things smarter”.
The report also says cities should to be more functional so as “not choke the economy”. Achieving this would increase national growth by about $29 billion.
Commission chair Peter Harris will present the report to Mr Morrison’s state and territory counterparts at a treasurers’ meeting on Friday.
Opposition employment spokesman Brendan O’Connor said while the report’s suggestion of a more inclusive society was in line with Labor policy, “you have to mean it”.
“So you don’t get to impose taxes on low a middle-income earners, tax cuts for multinationals, then argue you are about inclusive growth,” he told Sky News.