Strong economy, strong social compact: CEDA outlines path back to prosperity

Australia has the assets to be one of the world's most dynamic and prosperous economies, but we are failing to convert that advantage, CEDA's inaugural State of the Nation report has found.

The think tank is calling for policymakers to prioritise a dynamic business environment or risk drifting further into slow growth, weak productivity and rising social pressures.

Committee of Economic Development of Australia (CEDA) Chief Executive Melinda Cilento said that despite Australia’s extraordinary advantages, it risks falling behind as productivity and growth stagnate.

“Prosperity is not automatic. It requires deliberate choices,” she said.

A strong economy and a strong social compact

The report argues that Australia's prosperity has long rested on a distinctive national bargain based on two pillars: a strong economy that creates opportunity, and a social compact that gives people confidence they can get ahead.

“The evidence is clear that both pillars are under strain,” said Ms Cilento.

“A thriving private sector creates the jobs, investment and tax revenue to fund the services Australians rely on. Equally, a strong social compact supports participation, opportunity and social cohesion.”

Ms Cilento said in an environment where productivity growth is weak and unemployment and poverty are rising, policy settings need to make it easier to start, grow and invest in businesses.

“Business is not a problem to be managed. It is Australia's economic engine,” Ms Cilento said.

Minister for Business Dynamism

Responsibilities for regulation, competitiveness, innovation and digital opportunities are spread across multiple Ministers and portfolios. 

To address this fragmentation and to drive a stronger partnership between business and government, CEDA is calling for the appointment of a dedicated Minister for Business Dynamism to champion reforms that improve competitiveness and innovation, reduce regulatory burdens and strengthen confidence between business and government.

“Australia has ministers responsible for sectors, industries and issues across the economy. But no single minister owns the health and dynamism of the businesses - large, medium and small - that underpin our prosperity. A ministerial champion alone won’t solve this, but it’s start,” Ms Cilento said.

CEDA research has found declining rates of business formation, weak investment growth, lagging AI adoption and poor productivity performance in sectors such as construction and care services. Addressing these challenges will require policy settings that encourage innovation, investment and growth rather than adding complexity and cost.

A social compact that powers prosperity

At the same time, the report argues Australia must renew its social compact by focusing support where it is needed most, improving outcomes through prevention and early intervention, and ensuring future generations are not left carrying an unsustainable burden.

“We need a social compact that is targeted and eQective - not a sprawling system that spreads support so thinly it fails the people who need it most, but a well-funded floor that enables real agency and participation.

“Most economic reform priorities are well known and long advocated for but have been hard to sell to a community that has grown to mistrust that a strong economy will deliver benefits to them.”

“The choice before us is whether we continue to drift or whether we build a more dynamic economy, supported by a renewed social compact, that delivers opportunity and prosperity for the next generation.”

CEDA Chief Executive Melinda Cilento is available for further comment and interviews.

MEDIA CONTACT
Henry Madden
Media Relations Manager
Mobile: 0436 379 688
Email: henry.madden@ceda.com.au