Improving service sector productivity: the economic imperative

CEDA released a research report in June 2017 that examines the economic consequences of Australia’s productivity performance in the service sector. This report assesses the productivity performance of the sector and discusses policies and areas that can contribute to an improvement in productivity.

"Rapid technological change, along with globalisation, provide the biggest challenges and also opportunities for the service sector in Australia. Embracing technological change and ensuring industry and government have an innovation mindset will be key to our success.

"There is no doubt this will be a difficult road. Some of the biggest sectors in services have significant components that are government controlled and involve more than one tier of government, such as in health and education, making reform, as we have seen in recent years, all the more difficult."

Paul McClintock AO, National Chairman, CEDA 


The vast majority of Australian workers are engaged in the service sector which, in turn, generates the largest component of national wealth; and increasingly we are exporting services.

In recent times, Australia’s productivity performance has been poor, although this has been mostly the result of cyclical and industry-specific factors. The economic reforms introduced in the 1980s and 1990s have been successful in adding economic flexibility and improving Australia’s competitiveness. However, those reforms largely ignored a significant part of the service sector, particularly the non-market sectors of education and healthcare.

Australia’s long term economic prosperity is heavily reliant on productivity improvements. CEDA has been calling for a National Productivity Policy that addresses rigidities in the economy, incentivises innovation and improves the capability of its human capital – including in the education and health sectors. This was reflected in CEDA’s recent two-part series on economic repair (Deficit to balance: budget repair options and Australia’s economic future: An agenda for growth) which raised the importance of productivity-enhancing measures to ensure Australia’s economic prosperity.

It is of crucial importance that the service sector improves its productivity performance. In analysing this issue, CEDA aims to assess the role of the service sector and showcases examples of policy reforms and case studies including key policy learnings from these examples.

The report aims to discuss policies and areas that could contribute to an improvement in the service sector productivity performance in order to sustain Australia’s economic growth.

Chapters and authors 

> Productivity of health services

Rohan Mead, Group Managing Director, Australian Unity
Professor Jane Hall, Professor of Health Economics, Centre for Health Economics, Research and Evaluation, University of Technology Sydney
Associate Professor Kees van Gool, Deputy Director, Centre for Health Economics, Research and Evaluation, University of Technology Sydney

> Productivity of education services

Maria Spies, General Manager, Learning & Teaching Services, Navitas; and Head of Digital Learning Futures, Navitas Ventures
Kadi Taylor, Head, Strategic Engagement and Government Relations, Navitas
Helen Zimmerman, Chief Corporate Affairs Officer, Navitas
Professor Leo Goedegebuure, Director, LH Martin Institute
Associate Professor Ian Marshman, Honorary Principal Fellow, Melbourne Centre for the Study of Higher Education, Melbourne University

Sue Freeman, CEO and Managing Director, First Impressions Resources

> Productivity of financial services

Amy Auster, Deputy Secretary, Economic Division, Victorian Department of Treasury and Finance
with co-authors: Anthony Cussen and Chris Judde, Senior Economists, Victorian Department of Treasury and Finance

> Productivity of tourism

Dr Andreas Chai, Senior Lecturer, Griffith Business School, Griffith University
Professor Richard Eccleston, Director, Institute for the Study of Social Change, University of Tasmania; and Professor of Political Science, University of Tasmania
Dr Anne Hardy, Senior Lecturer, University of Tasmania; and Director, Tourism Research and Education Network (TRENd)
Dr Dugald Tinch, Lecturer in Resource Economics, Tasmanian School of Business and Economics

> Productivity of professional services

Karen McWilliams, Leader, Policy and Thought Leadership, Chartered Accountants Australia and New Zealand

> Productivity of transport infrastructure and logistics

Dr Don Gunasekera, Research Fellow, Centre for Supply Chain and Logistics, Faculty of Science, Engineering and Built Environment, Deakin University
Dr Hermione Parsons, Director, Centre for Supply Chain and Logistics, Faculty of Science, Engineering and Built Environment, Deakin University
Michele Huey, Group General Manager, Strategy, Transurban

> Digital future of services

Professor Beth Webster, Director, Centre for Transformative Innovation, Swinburne University

Report launch and release events

This report was launched in Sydney on 15 June 2017 with events following around the country.

Adelaide | 20 June 2017

Perth | 22 June 2017

Brisbane | 23 June 2017

Melbourne | 27 June 2017