Productivity crisis is no longer a slow-burn problem: CPA Australia

Australia’s largest accounting body, CPA Australia, says Australia’s productivity crisis is now serious enough to threaten economic growth, competitiveness and living standards unless governments act decisively.

In its submission to the Select Committee on Productivity in Australia, CPA Australia warns that Australia’s prolonged productivity slump can no longer be treated as a slow-burn problem.

Business and Investment Lead Gavan Ord said: “Australia is running out of time. If productivity continues to stagnate, living standards will go backwards and the economy will struggle to sustain growth.

“This is not an abstract policy debate. Weak productivity ultimately means lower wages growth and fewer opportunities for Australian businesses and workers.”

CPA Australia’s submission draws on recent work with the federal government and the Productivity Commission. It argues there is no quick fix, warning that piecemeal reforms and short-term political thinking have failed to arrest the decline.

“Productivity will not recover through tinkering around the edges. It requires sustained, coordinated reform across tax, regulation, fiscal policy and business capability,” Mr Ord said.

The submission identifies comprehensive tax reform is fundamental if Australia is serious about lifting productivity.

“Our tax system is increasingly complex, uncompetitive and misaligned with where the economy is heading. Continuing to avoid meaningful tax reform is a deliberate choice to accept weaker productivity and slower growth,” Mr Ord said.

CPA Australia also warns that regulatory overload is imposing significant and growing costs on businesses, particularly small businesses.

“Red tape is not just an inconvenience – it is a direct drag on productivity. Governments must stop treating regulation as the default response and start proving that non‑regulatory options have been exhausted,” Mr Ord said.

The submission highlights that unchecked public spending growth risks crowding out private investment and worsening productivity outcomes.

“Productivity growth is driven by a strong, innovative private sector. Excessive public spending can pull capital and labour away from more productive uses and ultimately make the problem worse,” Mr Ord said.

CPA Australia also points to Australia’s lagging technology adoption, especially among small businesses, and the need for better targeted support.

“We cannot assume technologies like AI will magically lift productivity. Without proper support, many small businesses will be left behind, and the productivity gap will widen,” Mr Ord said.

The submission calls for urgent action to boost young entrepreneurship, noting that Australia has too few young business owners relative to its population.

“If Australia wants a more dynamic and productive economy, it must make it easier for young Australians to start, grow and acquire businesses,” Mr Ord said.

While the federal government has rightly placed productivity at the centre of the national conversation, CPA Australia says the forthcoming Budget is a critical opportunity to move from rhetoric and incremental gains to meaningful, long-term reform that delivers lasting improvements in economic performance.