New report urges government to align productivity with purpose

As the government sharpens its focus on productivity growth ahead of its upcoming Economic Reform Roundtable, a new report from the Centre for Policy Development (CPD) says that reform efforts must be guided by a clear purpose – ensuring the benefits are widely shared and do not worsen existing crises such as inequality, cost of living, housing shortages, or climate breakdown.

“We shouldn’t assume that productivity gains will automatically translate into better lives,” said CPD CEO Andrew Hudson. “If we want a stronger economy that actually delivers for people, we need to make that the explicit goal – not just a hopeful by-product.”

The report, Productivity with Purpose, sets out practical reforms for tying productivity to outcomes that Australians value – such as secure work, affordable, high quality care and faster progress on net zero.

Structured around three priority areas – a more resilient and dynamic economy, a stronger care economy, and a faster, fairer net zero transition – the report brings together CPD submissions made to the Productivity Commission’s five pillar inquiries as well as contributions to the government’s Economic Reform Roundtable.

“Our recommendations are about giving government the tools and direction to grow the economy in a way that delivers real value to people – more time with family and friends, better health, and stronger community connection,” Mr Hudson said. “It’s a chance to turn productivity into something purposeful, not just a numbers game.”

Key recommendations include:

• Bold tax reform: Broaden the tax base and shift the mix away from income and towards land, rents and consumption – including increasing and broadening GST, raising income tax thresholds for those in lower brackets, introducing a national resource rent tax, and replacing stamp duties with a broad-based land tax.
• Valuing care and prevention: Adopt quality-adjusted productivity measures in care services, increase investment in prevention (with universal early childhood education and care highlighted as a key opportunity) and create a national framework for preventative policy based on the Victorian Early Intervention Investment Framework (EIIF).
• Boosting efficiency in the net zero transition: Expand the Safeguard Mechanism, frontload clean energy investment to lower high initial costs, amend the Environment Protection and Biodiversity Conservation (EPBC) Act to consider climate impacts, and update investment mandates for agencies like the Clean Energy Finance Corporation (CEFC) to spur innovation.

“We’re calling on the government to think big – and act now – on reforms that can set Australia up for generations,” said Mr Hudson. “Some of these changes will take time, but there are immediate steps we can take today to secure a fairer, more sustainable future.”