According to the Minerals Council of Australia’s (MCA) Economic Series report released today, greater business investment in new technology and projects is essential to ensure Australia’s skilled workforce can drive higher wages and a stronger economy.
MCA’s Chief Executive Officer Tania Constable said the last decade has seen Australia going from one of the best performing OECD countries for private sector capital investment to one of the poorest performing, with labour productivity growth falling 2.5 percentage points.
“Since the end of the last mining investment boom, growth in the economy’s real net capital stock substantially slowed and it is now growing at its lowest rate in 60 years.
“Unless this is turned around, Australia is at risk of experiencing continued weakness in business investment, which in turn will further weaken the contribution from our stock of capital to productivity growth.”
Ms Constable said over the long term, increases in the amount and efficiency of capital per worker has been an important component of productivity growth and, therefore, economic growth, which highlights why Australia must remain internationally competitive at attracting investment.
“Since the 1960s, achieving strong growth in business investment has been a challenge for Australia despite the significant contribution from the mining industry over the last two decades.
“Improving Australia’s productivity performance by attracting capital investment will require comprehensive economic reforms aimed at reducing policy distortions and disincentives that are limiting the economy’s competitiveness and the ability of business to drive economic and productivity growth.”
To attract capital investment, the MCA report highlights the need for economic reforms that deliver internationally competitive tax settings; expanded trade and investment opportunities; efficient and effective regulatory settings; practical and beneficial workplace relations rules; an efficient transformation to net zero emissions; and, industry-focused skills and training programs.
She said a 1 per cent lift in productivity by 2030 would deliver a $200 billion boost to the Australian economy, 9.4 per cent increase in real wages and Australian families $11,700 better.
“Policies that improve productivity and competitiveness and attract investment, are integral to Australia maintaining its comparative advantage in mining and minerals exports, and expanding minerals processing and mining-related manufacturing, which will ultimately benefit all businesses, households and workers.”