Australia needs a new seamless economy deal to unlock productivity growth

Australia should kick off a new wave of seamless economy reforms and boost its National Productivity Fund, a new CEDA report has found. 

Towards a more seamless Australian economy calls on the Federal Government to deliver a new seamless national economy agreement with the states and territories, and pay them to implement reforms.  

“These recommendations should form part of the outcomes of the Government’s Economic Reform Roundtable as part of a series of quick wins to streamline regulation across the economy,” CEDA Head of Research Andrew Barker said. 

“Our report identifies nine priority areas ripe for updating that could unlock billions of dollars in economic benefits. Better data sharing alone could boost the economy by up to $10 billion.” 

The original seamless national economy agreement between 2009-13 delivered an estimated $6 billion in annual benefits to the economy. The Productivity Commission estimates the Australian Consumer Law alone benefits the economy by $880 million a year. 

“Frictions that prevent firms from operating across Australia restrict competition, raise costs, reduce choice and constrain labour mobility,” Mr Barker said. 

“But this is more than a simplistic call to cut red tape. 

“The economy has become much more digital and service-based in the last 15 years. Constraints on sharing data across borders have become even more damaging.  

“More Australian businesses need to become competitive globally, and those that are solely domestic need to become more cost effective. 

“Reducing barriers for people to move to better jobs can also boost productivity by better matching skills to jobs. 

“To enable this, regulations should be streamlined across a range of sectors affecting many areas of Australians’ lives.” 

Priorities include: 

• National occupation licensing to increase worker mobility and encourage the most productive businesses to expand;  
  
  
• Harmonised and efficient environmental assessments to enable timely, environmentally responsible renewable energy development;  
  
  
• Payroll tax harmonisation;  
  
  
• Data sharing across jurisdictions by default to improve policy-making;  
  
  
• More streamlined and consistent land-use regulation to tackle Australia’s housing shortage;  
  
  
• Consistent regulations to enable a more circular economy; and  
  
  
• National care-worker screening to close gaps in safety checks and ease skills shortages. 

“Crucially, the Government should make reward payments to the states and territories after they’ve undertaken reform and this has been independently verified,” Mr Barker said.  

“This worked under the original agreement: governments completed 21 of the 26 reforms that had reward payments attached, but just 10 of 19 the reforms that didn’t have payments.” 

The National Competition Policy agreement reached late last year could provide a framework for a new agreement. 

But the scale of funding needed is likely to exceed the $900 million available under the Federal Government’s new National Productivity Fund. National occupational licensing alone is likely to require hundreds of millions of dollars. 

“A reinvigorated seamless approach won’t solve all the issues in Commonwealth-State relations, but a concerted drive to streamline regulation can lift our economic dynamism and productivity,” Mr Barker said. 

“The Government should use this reform roundtable to shape an agenda of both quick wins in areas like regulation, and longer-term reform priorities that will take time to achieve, such as broad-based structural tax reform. 

“Our seamless economy proposals outline a clear plan for some achievable and beneficial quick wins.”  

CEDA Chief Economist Cassandra Winzar is attending day three of the Economic Reform Roundtable tomorrow. 

CEDA Head of Research Andrew Barker and Chief Economist Cassandra Winzar are available for further comment and interviews.

Media contact:
Justine Parker, Media Manager and Content Specialist 
Mobile: 0436 379 688 | Email: justine.parker@ceda.com.au