The country is being urged to overhaul its business and tax settings to remain internationally competitive. According to the Organisation for Economic Co-operation and Development, Australia is hindered by slow productivity growth and barriers to investment. Although productivity levels remain slightly above average, the rate of improvement has stagnated, raising doubts about the effectiveness of current economic policies.
At present, Australia's labour productivity stands at approximately US$70 per hour, just above the OECD average of US$66. However, it still lags behind major economies such as the US at US$98 and the EU at US$73. Government statistics suggest there has been little improvement since 2017. In response, officials are reviewing a range of reforms, including faster approvals for major projects, cutting red tape in the financial sector and updating infrastructure regulations. Broader and longer-term changes are also being considered to help close the gap and drive recovery.
Between 2010 and 2023, investment in Australia rose by only 1.8% per year, below the 2.5% average growth across developed OECD nations. A proposed solution involves lowering the corporate tax rate to 20% for firms earning under $1 billion, while introducing a 5% cash flow tax mainly targeting businesses with low investment levels. While experts believe this could encourage stronger growth, Australian companies remain concerned that the combined tax burden might appear uncompetitive on a global scale.
This is part of a wider challenge. Australia is slipping in global rankings for business support, innovation and investment. Fewer firms are choosing to list on Australian stock exchanges, with more delisting than listing from 2021 to 2024. The decline has been linked to high listing costs, complex regulatory procedures and prolonged IPO processes. Authorities are weighing measures such as streamlined listing requirements and reduced fees for smaller companies.
Emerging technologies like artificial intelligence add another layer of complexity. While AI could improve productivity in sectors such as finance, regulators warn it may introduce new threats, including fraud, cyberattacks and increased market volatility. These risks are amplified when multiple firms depend on similar AI systems.
To attract investment and regain its economic edge, observers say Australia must increase the role of superannuation funds in infrastructure projects and reconsider how its tax and regulatory frameworks compare to those in the US and UK. The discussion is expected to intensify as the government seeks to balance growth with risk and reform.
