Budget Fails to Address Australia’s Productivity Challenge: Peak Industry Groups

An employee works at the Multi Slide Industries manufacturing plant in Adelaide, Australia, on Aug. 12, 2013. Morne de Klerk/Getty Images

Australia’s peak employer association welcomed the commitments in the budget but said it failed to target the country’s structural economic challenges.

Innes Willox, CEO of the Australian Industry Group (Ai Group), said the budget’s contribution to the productivity agenda was limited to positive initiatives that would boost the workforce over time.

“Today’s federal budget risks tinkering at the edges of Australia’s structural economic challenges at a time when the domestic and global economies are under significant stress,” he said.

The budget outlined Australia’s immediate challenges, including declining growth, rising inflation, rising unemployment, declining business investment, and dramatic rises in electricity and gas prices.

“The question is whether the budget does enough to fortify the economy against these structural challenges by boosting productivity, curtailing spending, and supporting business and household confidence,” Willox said.

“More could have been done to propel the economy through these challenging times.”

On top of these challenges, Willox noted concerns that the government’s recent proposed workplace reforms for a broader system of multi-employer bargaining would do little to boost productivity.

“The Productivity Commission’s latest interim report from its Five-Year Productivity Inquiry fires a very clear warning shot that an expansion of multi-party bargaining risks damaging our economy and workplaces,” he said on Oct. 14.

“The last thing we need as Australia struggles to stave off a recession is out-of-control union-led strikes and industrial action.”

Time to ‘Pull out All Stops’

The Business Council of Australia CEO Jennifer Westacott concurred that the economy’s most significant challenges in the next three years was reform to drive growth and productivity.

“We are facing a herculean set of challenges. The task ahead is enormous,” she said.

“Productivity growth over the last decade was the worst in six decades. This remains the biggest handbrake on wages growth.”

Westacott said it was time to “pull out all stops” to drive productivity.

“The budget does little to tackle this problem. We can’t wait for the May budget to turn this around,” she said.

Meanwhile, the Australian Chamber of Commerce and Industry (ACCI) said the budget was a responsible one that would help to encourage stronger labour force participation.

“This budget covers the essential elements of economic management and tackling growing cost pressures. However, longer term structural challenges that threaten to hold us back will need continued, and rigorous, attention,” ACCI CEO Andrew McKellar said.

He also agreed that the proposed workplace reforms represented a “seismic shift” in Australia’s bargaining system.

“Whilst this budget takes a first step towards fiscal repair, long-term challenges remain considerable,” he said.