Article courtesy of The Australian
19.08.2025
The big danger in the productivity roundtable discussions starting in Canberra on Tuesday is that the government will confuse popular ambition with genuine reform. This includes accepting the calculations of trade unions that fewer hours of work for the same pay represents a productivity improvement. Or that crimping the transformative potential of artificial intelligence would be a social good rather than a national missed opportunity.
Perhaps the biggest danger lies in a belief that doubling down on a net-zero energy transition will produce the economy-wide benefits that are necessary for future prosperity.
Grasping the net-zero ambition is being presented as low-hanging fruit. According to Productivity Commission chair Danielle Wood, given the size of the environmental and economic prize “net zero could be ground zero for productivity reform”.
Her suggestion is for an overhaul of environmental legislation to empower an independent regulator backed up by “a well-resourced strike team with strong clean-energy capability dedicated to approvals for high-priority national projects and a co-ordinator-general to work with and across government to keep approvals on track”. This is a recipe for more bureaucracy to run roughshod over the objections of those who stand in the way.
Missing has been a clear explanation of how exactly doubling down on renewable energy will deliver the productivity boost that is needed. This is particularly so given the amount of government money that must be waged to underwrite the profitability of projects – that by necessity of intermittency must be overbuilt – and the rollout of billions of dollars’ worth of controversial transmission infrastructure.
Experience to date is that the cost of the energy transition belongs firmly on the negative side of the productivity ledger. As has been noted repeatedly, Australia’s traditional competitive advantage of low-cost energy is being squandered on a clean-energy transition that has proved more costly and less effective than was promised.
The danger was expressed clearly by former Treasury assistant secretary David Pearl, who said the roundtable always was intended to rubberstamp Labor’s taxation, net-zero and big-government plans.
With substantial tax reform involving the GST off limits, what is left is a union blueprint to confiscate the fruits of any future productivity gains before they are even achieved. The meeting agenda is to push further beyond question the need to remove the financial and regulatory barriers to renewable energy projects at scale.
As Mr Pearl suggests, “no one will dare suggest the intermittent power push is a major reason, but not the only one, productivity and living standards are flatlining in this country – to even raise this question will be strictly verboten”. This is unfortunate.
What is needed is a frank appraisal of the misallocation of political capital and public funds on government indulgences that extend beyond energy to the care economy and what have become other universally expected welfare measures.
The situation is dire. The average citizen of OECD countries has enjoyed a 22 per cent rise in living standards across the past decade while Australians have achieved a 1 per cent rise. The Reserve Bank has downgraded its productivity growth assumption from 1 per cent by the end of the forecast period to 0.7 per cent.
Rather than new justifications to raise and spend money, however well-intentioned, the challenge must be to rein in the size of government and remove it as an obstacle to decision-making by private enterprise. As a nation, we must rediscover where our envious prosperity has come from. And it is not government intrusion.
