Treasurer Josh Frydenberg will call on companies to do more to boost productivity while flagging “pragmatic” changes to the industrial relations system.
Mr Frydenberg will use an address to the Business Council of Australia in Melbourne to urge companies to shift their focus from returning extra capital to shareholders or hanging on to it to using it to invest in new technologies, The Australian reports.
Raising the country’s productivity level to 1.5 per cent from the current 1.1 per cent will ensure the economy’s growth over the next 10 years and raise the pay packets of workers, Mr Frydenberg will say.
“Our productivity growth over the last decade has slowed and we cannot simply rely on high commodity prices to boost national income,” a draft copy of Mr Frydenberg’s address states, according to the newspaper.
“What is in our control is our ability to influence productivity with the right policy settings and business practices.
“Should we get our average annual productivity growth from 1.1 per cent back to 1.5 per cent, then annual incomes per person will be over $3000 higher by the end of the decade. GDP growth and real wages will also be 4 per cent higher and the economy $70 billion bigger overall. That is a lot to play for.”
He says share buybacks and capital returns have become the default option for large corporations but questions if it is the best thing for future growth.
Treasury research shows about 95 per cent of Australian companies have done little to improve their productivity in 15 years while special dividends and buybacks worth billions have become the norm.
“If we are going to create new jobs and enable people to earn more for what they do, we need businesses to increase their capital expenditure and to adopt new technologies and business practices that effectively integrates capital with labour,” he says.