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5 Year Productivity Inquiry: The Key to Prosperity

Interim report 1

This interim report was released on 3 August 2022.

Productivity growth is about harnessing our ingenuity to do more with the resources we already have — working smarter, not harder — and investing in the latest technology and the best ideas.

The Productivity Inquiry focuses on the enablers of productivity growth in a modern, market-based, service-oriented world. This first report provides the broad productivity context for the exploration of productivity-enhancing reforms detailed in a series of forthcoming interim reports.

You were invited to examine the interim report and to make written submissions by 21 October 2022.

The final inquiry report is to be handed to the Australian Government in February 2023.

The release of the final report by the Government is the final step in the process.

Under the Productivity Commission Act 1998, the Government is required to table the report in each House of the Parliament within 25 sitting days of receipt.

Download the interim report

  • Media release
  • Contents

Productivity: The key to prosperity

Productivity growth, based on the spread of new, useful ideas, is the key to Australia’s continued prosperity. But the future pattern of innovation and growth could look different from that of the 20th century, according to a report by the Productivity Commission, setting out the context of its current 5-year Productivity Inquiry.

“Productivity growth is essential to address the nation’s economic challenges, including rising cost of living pressures, but it is not guaranteed,” Productivity Commission Chair Michael Brennan said.

Releasing the first interim report as part of its latest 5-year Productivity Inquiry, the Commission warns that Australia’s productivity growth (along with that of its global peers) has slowed in the last two decades and is now increasing at its lowest rate in 60 years.

Improving Australia’s productivity performance requires overcoming specific challenges. Some are global: the need to decarbonise the economy is one, as is heightened geopolitical tensions and supply chain disruptions that hinder trade and investment flows. Arguably the biggest challenge lies in the large and growing services sector — ironically so, given an expanding services sector is correlated with rising prosperity — where historically, productivity growth has been relatively hard to achieve.

“In 2022, ninety percent of Australian workers are employed in the services sector. This has a significant impact on how we think about productivity. We have to look for new opportunities to drive productivity growth, including reviewing our policy levers and the industries where we concentrate our efforts.”

“Nowadays, improvements in service quality and the impact innovative new products and services have on people’s lives matter most. However, the overarching principle of productivity — that we aim to work smarter, not harder or longer — is as important as ever,” Mr Brennan said.

The Commission has identified four areas of policy focus that best reflect the challenges and opportunities Australia faces and will shortly release interim reports on each of the productivity ‘enablers’ for public consultation. The key enablers of focus are: innovation and diffusion of new processes and ideas; data, digital technology and cyber security; a productivity-friendly business environment; and a skilled and educated workforce.

“These enablers are relevant to our current context — the rising services sector, the challenge of decarbonisation and continued openness to the best the world can offer. But they also reflect our best judgment about where we can achieve the biggest return on our reform effort. They are not specific bets on the future sources of growth, so much as broad settings that stack the odds in Australia’s favour,” Mr Brennan said.

A full copy of 5-year Productivity Inquiry: The key to prosperity is available from the Commission’s website:

Media requests

Leonora Nicol, Media Director – 0417 665 443 / 02 6240 3239 /

  • Preliminaries: Cover, Copyright and publication detail, Opportunity for comment, Terms of reference, Acknowledgements, Contents and Foreword
  • 1. Productivity growth: the essence of prosperity
    • 1.1 Productivity and prosperity go hand in hand
    • 1.2 A micro lens on productivity growth
    • 1.3 The aggregate picture
    • 1.4 Productivity: what lies beyond the aggregates?
  • 2. Forces shaping Australia’s productivity challenge
    • 2.1 Australia’s recent productivity performance
    • 2.2 Forces shaping future productivity growth
  • 3. Enabling future productivity growth
    • 3.1 The Commission’s approach to the current productivity inquiry
    • 3.2 The recommendations from Shifting the Dial continue to be relevant
    • 3.3 What comes next in the inquiry?
  • A. Productivity and how it is measured
    • A.1 What is productivity?
    • A.2 The elusive quest for the causes of growth
    • A.3 Changing prices make productivity measurement challenging
    • A.4 The impact of measurement error
  • References

Printed copies

Printed copies of this report can be purchased from Canprint Communications.

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