In 1930, John Maynard Keynes looked a century ahead and predicted that productivity growth would transform the lives of future generations. Nearly 100 years on, Australia's standard of living has soared. Real income per person is more than 5 times higher than it was when Keynes wrote. Our homes are larger, our education better, our healthcare more advanced.
But Australia faces a new challenge. For much of the past 2 decades, productivity growth has slowed. Output per hour worked barely moved in the 5 years leading up to the pandemic. Since then, capital deepening has lagged. Sectoral shifts have made productivity harder to measure - and harder to lift.
This isn't just an economic concern - it's a social one. Productivity is the primary driver of real income growth. It's what pays for aged care and childcare, for better schools and bolder ambitions. Without it, the nation struggles to lift living standards, reduce inequality, or build the society we aspire to.
Recognising this, the Albanese government has placed productivity at the heart of our economic strategy - not in the abstract, but in a way that is practical, inclusive and forward‑looking. What we call the 'progressive productivity agenda' focuses on 3 key areas: investing in individuals, in infrastructure, and in institutions.
Take individuals. Productivity is ultimately about what people can do - the ideas they generate, the technologies they adopt, the challenges they solve. To build those capabilities, we've funded free TAFE and expanded university access - especially for students from under‑represented backgrounds. A more skilled workforce is a more productive one.
We're strengthening healthcare, too, because a modern, efficient health system is economic infrastructure. New urgent care clinics are relieving pressure on hospitals. Expanded bulk billing is cutting out‑of‑pocket costs and lifting wellbeing. Better health enables fuller participation, fewer absences, and a stronger capacity to contribute.
Mobility is also key. Reforms to occupational licensing and the removal of non‑compete clauses for low‑ and middle‑income workers make it easier for people to move between jobs. That makes the labour market more dynamic - and the economy more resilient.
Inclusion enhances productivity. When more people are empowered to reach their potential, the economy allocates talent more efficiently. That's true for women entering male‑dominated fields, for people with disabilities finding suitable work and for Australians from disadvantaged backgrounds building careers. The statistics may not always capture the gains immediately - but the long‑term benefits are undeniable.
Next, consider infrastructure. In recent decades, productivity in housing construction has gone backwards. Despite more workers and capital, we're building fewer homes per hour than we did in the 1990s. That's not just a housing shortfall - it's a productivity failure. Solving it means more than just spending money: we need faster approvals, better planning and clearer coordination. When we build better, we don't just increase supply - we create fairer cities and stronger communities.
Digital infrastructure is just as critical. Technologies such as artificial intelligence are reshaping how we work and innovate, with studies showing significant productivity gains, especially for less experienced workers. But smaller firms are slower to adopt these tools. That's why the government is continuing to upgrade the NBN and support access to digital platforms. No business should be left behind due to poor connectivity.
Of course, infrastructure only performs as well as the institutions behind it. Productivity depends not just on investment, but on the systems that turn ideas into delivery. We've strengthened the ACCC, reformed Australia's merger laws for the first time in half a century, and committed to a new National Competition Policy designed to lift dynamism and reduce barriers to entry.
Our approach to regulation follows the same principle. It isn't deregulation for its own sake - it's regulation that is proportionate and focused on outcomes. From a streamlined 'single front door' for major investors to improvements in development pipelines, we're reducing friction where it impedes progress.
Public sector performance matters too. To build a culture of continuous improvement, we've launched the Australian Centre for Evaluation - ensuring that programs are tested rigorously and refined over time. Evidence‑based policy isn't about paralysis by analysis. It's about learning what works and doing more of it.
None of this is simple. But the cost of inaction is higher. In August, the Treasurer will convene a reform roundtable - bringing together leaders from business, unions and civil society. Proposals must meet 3 tests: do they serve the national interest, are they budget‑neutral or better and are they specific and practical?
The progressive productivity agenda is about expanding what Australians can do with their lives - not just lifting output, but enriching experience. It's about connecting fairness with dynamism, opportunity with efficiency. If we get this right, we can create a future that is not just more prosperous - but more liveable, more inclusive and more secure.
