MRC Report: The Productivity Imperative

The Productivity Imperative: policies for a prosperous australia

Published: March 2025

Author: Nico Louw

Productivity is one of the least understood concepts in public policy. We need to raise awareness of, and find solutions to, Australia’s declining productivity growth as it is central to our future prosperity.

Global geopolitical disorder and the rise of strategic competition between democracies and the autocracies of China, Russia, Iran and North Korea means it has never been more important for Australia to find ways to improve productivity and become a stronger economy.

Analysis in this report demonstrates how a modest 0.3% increase in annual productivity growth would increase GDP by $877 billion over the next decade. The Commonwealth Budget would record a cumulative $12 billion surplus instead of the currently projected $221 billion deficit.

The current Government’s approach of a Government-run ATM to support a few chosen sectors is not a productivity policy. We can’t put all our eggs in even a few baskets.

Previous shifts in productivity were not predictable and we cannot assume that supporting a particular technology or innovation will lead to future changes in productivity. We need broad-based productivity enabling policies that will work over the long term.

Instead of the usual grab bag of well-known measures that are politically untenable, unimplementable, or that need the states (e.g. GST changes, ending stamp duty), the MRC has instead chosen to take a step back and put forward ideas for what the Commonwealth can do unilaterally or at least primarily lead with the states.

These may not be as exciting, but they’re all things that the Government could do today that will make a difference for productivity.