NSW Productivity Commission outlines reforms to ‘reboot’ economy

By Shannon Jenkins

June 1, 2021

(Image: Adobe/Sergey Ryzhov)

New South Wales productivity commissioner Peter Achterstraat has unveiled 60 recommendations to the state government that he says will provide ‘significant’ benefits to the economy if implemented.

In a 371-page white paper, released on Monday, the Productivity Commission outlined a productivity reform agenda that aims to reboot the state’s productivity growth.

Productivity growth has slowed in NSW over the past decade, the report said. Growth averaged 2.8% per year for the period from 1994-95 to 1998-99, before slowing to an average of 0.8% between 2003-04 and 2011-12, and 0.7% since 2011-12.

The commission noted that lifting NSW’s productive capacity would require ‘the same fix as always’.

“We have to seize opportunities to change how we do things. Over the course of years and decades, this is the one thing that reliably drives up living standards,” it said.

Last year the commission released a green paper seeking feedback from the community, governments, businesses, and industry associations on 56 draft recommendations for boosting productivity growth.

Following consultation, the commission has identified 60 opportunities for long-term productivity and economic growth, centred around four foundations, including:

  • Talent — Invest to improve workforce flexibility and resilience, and re-orient training and education priorities to meet employment and skill demand in the NSW economy.
  • Innovation — Ensure NSW regulation protects citizens while allowing innovation, technology, and new ways of doing things to flourish.
  • Housing — Pursue policies and regulation to increase the supply of the right types of housing, in the right places, at the right times.
  • Infrastructure — Establish 21st century infrastructure that makes our work more effective, and helps businesses get more from their investments.

READ MORE: NSW Productivity Commission green paper highlights key opportunities for growth

The paper has made 18 priority recommendations based on these foundations, including broadening the supply of quality teachers; building new pathways into trades; evaluating the success of COVID-19 regulatory changes; lifting the ban on nuclear electricity generation for small modular reactors; switching the tax mix to more efficient taxes; reforming housing supply policy; developing a long-term vision for the water sector; and expanding higher density development within transport hubs.

The reforms would improve the economy by making housing more affordable, lowering the cost of living, making it easier to do business, and making it easier to move to NSW, the commission said.

They would also boost gross state product (GSP) by 2% per annum by 2041 — an increase of $19.4 billion, according to Achterstraat.

“To put this into perspective, this means lifting GSP per capita by 1.7% and is equivalent to each NSW citizen over the age of 15 receiving an additional $2,000 per year by 2041,” he wrote in the report.

“The benefits of reform are significant.”

The commission has urged the state government to move away from stimulus measures post-pandemic, and to instead turn to ‘productivity-boosting’ reforms.

“Many stakeholders have long advocated for productivity reform. But these calls have intensified through the natural and public health challenges of the past year. Many recognise the need to act now to help drive the state’s economic recovery over the coming months,” it said.

“We need to look now to productivity boosting reforms that will assist with our immediate economic recovery, that will grow the size of the NSW pie for citizens and businesses in the decades ahead.”

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