Productivity policy is often imagined as a search for the next big breakthrough. Frequently, it begins with something more prosaic: clearing away the delays and duplications that make everyday business harder than it needs to be.
That is the thinking behind this year's Budget productivity package. It is built around a powerful idea: make the economy easier to move through.
The package is expected to cut regulatory costs, with the National Competition Policy reforms alone adding around $13 billion to the economy each year once implemented. That is an average benefit of around $1,200 for every household in Australia.
The productivity package reduces frictions that have accumulated across the economy: cutting financial‑sector paperwork, reducing duplicative data requests from financial regulators, streamlining foreign investment, speeding up the investor front door for major projects, and ensuring skilled workers do not need separate licences and fees to work across state borders.
None of these reforms will dominate a political cartoon. Together, they make it easier for firms to invest and expand, while spending less time feeding the compliance machine.
A growing business should spend its energy finding customers and hiring workers, rather than learning eight licensing regimes. A foreign investor should face rigorous scrutiny where it is needed, while receiving faster decisions where risks are low. A bank should provide regulators with the information they require once, rather than repeatedly in slightly different formats.
Labor's broader productivity agenda is about investing in individuals, infrastructure and institutions. This Budget package is especially focused on the third of these. Good institutions reduce uncertainty, shorten queues, lower costs and make capital more mobile. Poor ones turn time into a tax.
Our package also recognises that Australia has a building problem. Housing is expensive partly because construction has become slow and cumbersome. A recent Productivity Commission report found that housing construction productivity has fallen by 12 per cent over the past three decades, even after accounting for the increased size and quality of new homes.
The Budget will make access to all standards referenced in Australian legislation free, simplify planning processes and support modern construction methods such as modular housing. A builder should be able to read the rulebook without paying for the privilege. Making construction standards free will save small trade businesses up to $1,600 per year in access fees.
The gains from better housing regulation are larger still. The Productivity Commission has estimated that regulation can add up to $320,000 to the cost of a new home and $175,000 to the cost of a new unit.
If we want more affordable housing, we need to build more homes, and build them faster. That requires better approvals, clearer standards, modern construction methods and a regulatory system that rewards speed.
The same logic applies to labour supply. The Budget will cut the time it takes migrant trade workers to enter the workforce by up to six months.
When Australia has a shortage of electricians, plumbers and carpenters, leaving qualified workers on the sidelines carries a real economic cost. Faster recognition means more people earning and more homes being built. Australian workers should be able to move seamlessly across state borders under one set of requirements that prioritises safety and quality.
There is a practical small business element too. Making the $20,000 instant asset write‑off permanent gives firms more certainty when deciding whether to buy the ute, the coffee machine, the laptop or the piece of machinery that lets them do more with each hour worked. One business upgrades a tool. Another automates a process. Across thousands of firms, small improvements compound.
Digital capability is another strand of the package. The expansion of Digital ID will make it easier for Australians to access government services online. Tokenised government bonds and payment‑system innovation point to a future in which public infrastructure helps private innovation, rather than trailing behind it.
Better digital systems save time for citizens, reduce administration for government, lower costs for business and create platforms on which new services can be built.
The Budget package sits alongside Labor's broader work on the other two "I's". Investing in individuals means free TAFE, better skills recognition, reforms to occupational licensing and action on non‑compete clauses so workers can move to the jobs where they are most productive. Investing in infrastructure means building more homes, improving digital systems and supporting the transport and energy networks that connect people to opportunity.
But the new package is important because it is concrete. It deals with the friction points that businesses encounter in real life: the approval stuck in the pipeline, the standard behind a paywall, the worker barred from using their skills, the regulator asking for the same data twice.
Productivity policy is cumulative. It is built through steady reform, sector by sector and bottleneck by bottleneck. That is why this package is valuable. It removes a series of small obstacles that, in aggregate, have become a large drag.
Economic reform is sometimes about grand architecture. The budget's productivity package is more like good plumbing: less visible than the facade, but essential to how the whole system works.
