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An Australian think tank says the nation’s governments must make tough policy decisions in 2022 to address ballooning inflation, while driving economic momentum as the country recovers from the pandemic.
Committee for Economic Development of Australia chief executive Melinda Cilento believes 2022 will be a critical year in shaping the next generation of economic and social policy for Australia.
“Now more than ever, Australia needs policymakers who are forthright in confronting these choices and challenges, and in communicating their priorities and intent,” she said releasing CEDA’s economic and political outlook 2022 report.
Ms Cilento said Australia’s productivity growth of 0.9 per cent over recent years falls well short of the long-run 1.5 per cent annual growth rate upon which government projections are predicated.
“This is concerning as productivity growth has contributed over 80 per cent of growth in Australians’ incomes over the last three decades,” she said.
To increase productivity, she said, there needs to be measures that facilitate greater mobility of workers, while lifting capacity through skilled migration, education and training.
Australian businesses should also be encouraged to take advantage of the benefits of technology.
“The COVID-19 pandemic has highlighted the importance of having productive, innovative businesses with strong tech capabilities – these firms were the ones most resilient over the past two years,” she said.
She also says it makes sense to target sectors that have been “productivity laggards”, such as infrastructure and construction.
“Major public infrastructure investment is at historically high levels and still to peak in 2023,” she said.
“This should be used as an opportunity for governments to unlock greater productivity in delivery.”
The report comes just week’s out from Treasurer Josh Frydenberg pre-election budget on March 29.
It also coincides with CEDA’s annual economic and political outlook forum in Sydney on Wednesday.
Colin Brinsden, AAP Economics and Business Correspondent
(Australian Associated Press)