The average working week will blow out by two hours and wages will plummet 40% if Australia does not radically boost its productivity, Treasurer Jim Chalmers will say Thursday, sending a clear message that industry — including small businesses — must find an edge or fall behind.
A new five-year report from the Productivity Commission suggests annual productivity growth has collapsed to just 1.1%, according to a speech Chalmers is set to deliver before the Committee for Economic Development of Australia on Thursday.
An early excerpt of the speech, obtained by The Guardian and The Australian, suggests Australia’s productivity growth is at its lowest point in 60 years.
Had Australia’s productivity growth continued at its 60-year average, the typical national income would have been a cool $4,600 higher than it was in 2020.
The nation has a “productivity problem”, the Treasurer will say, blaming a hangover caused by a “wasted decade” under Coalition leadership.
Unless the nation significantly boosts its productivity, Australians will need to tack an extra 5% onto their work weeks in exchange for 40% lower wages, Chalmers will claim.
The Productivity Commission report, which will be released in full on Friday, reportedly posits five key areas for improvement.
To catch up, Australia must up-skill its workers to handle the jobs of the future; capitalise on new ways to utilise data; bolster competition across markets; streamline government services; and pursue the green energy transition at the lowest possible cost.
Chalmers will reportedly hold off on signing the federal government up to all recommendations leveled by the gloomy report, saying no government has ever enacted every call for change handed down by the Productivity Commission, and that Labor has its own priorities.
Nevertheless, the Treasurer is set to claim the federal government will champion policies to boost productivity through the green energy transition, the usage of Australia’s vast data stockpile, and efficiency gains in government services.
For small businesses, the report serves as a grave reminder of the need to constantly pursue productivity improvements.
Data collated by the Australian Bureau of Statistics suggests small businesses are significantly less likely to introduce goods, services, or processes compared to their big business counterparts.
Some 26% of businesses with between 5-26 employees introduced new goods or services in the two years ended June 2021, compared to 35% of businesses with 200 employees or more.
52% of those small businesses added new processes, compared to 61% of their larger competitors.
At the same time, 39% of enterprises classified as ‘innovating businesses’ registered meaningful productivity improvements.
Successive federal governments have designed grants and programs to boost small business productivity — with a particular focus on enhancing small business digitalisation.
Other forward-thinking measures are also under contemplation: last week, a Senate committee formally recommended a national four-day workweek trial, a move it said could actually improve business efficiency while boosting employee satisfaction.
Senior Business Journalist
Focused on the small business sector, David’s work covers the political, regulatory, and economic issues facing Australian entrepreneurs. Prior to joining SmartCompany, he was a reporter for Business Insider Australia. You can follow him on LinkedIn.
