The 2023 Intergenerational Report (IGR) was released last week. So, what is it? The IGR is required every five years under the 1998 Charter of Budget Honesty Act as a way of assessing how current government policies will work over the next four decades.
The 2023 IGR projects the outlook of the economy and the Australian Government’s budget to 2062-63. This is the sixth IGR and its analysis and projections of the key drivers of economic growth can help inform public policy settings to better position Australia for the next 40 years.
The 2023 IGR highlights several key shifts facing the Australian economy including rising demand for care and support services, geopolitical risk and fragmentation, and clearly outlines the fundamental need to boost productivity.
The report points to slowing economic and population growth over the next 40 years with economic growth expected to average just 2.2 per cent a year in real terms compared to 3.1 per cent over the past 40 years.
It paints a picture of a nation that looks older and lives longer, is potentially paid better, but also faces major workforce and climate challenges, with artificial intelligence (AI) offering the potential to transform the future of Australian productivity through an explosion of new digital technologies.
It is clear in the report that productivity and budget issues must be solved if we are to maintain Australia’s living standards. Productivity in Australia has been falling for some years and reportedly currently sits at a 60-year low.
Stamp duty on housing remains an impediment to home ownership whilst stamp duty on crop insurance adds to the insurance affordability issues facing farmers who are trying to manage their own risk.
Red tape and an excessively complex industrial relations system continue to pull productivity down. We must make it easier to run a business and employ people if we are going to improve productivity across the board. The current industrial relations system is just about impossible for businesses, small or large, to navigate and businesses are drowning under excessive layers of regulations, rules, and standards.
Government policies that address barriers to business dynamism and competitive pressures and encourage adoption of emerging digital technologies can improve Australia’s productivity performance.
Whilst agriculture in Queensland has seen an increase of productivity, largely due to recent positive seasonal conditions and the growing adoption of useful technology, farmers across the state are struggling to wade through onerous red and green tape requirements. Increasingly, complicated and inflexible industrial relations legislation is making it harder and harder to employ a workforce making the current skills shortage even more difficult to navigate.
If we are to ensure sustainable food, fibre and foliage production systems and maintain positive living standards for future generations, we must improve productivity and support the ongoing viability of private enterprise.