Nation's 'lousiest decade' targeted in two-year review

Boosting competition has been identified by the government as key to helping reinvigorate productivity growth, which has virtually stagnated in recent years, dragging on real incomes and national prosperity.

Announcing the review, Treasurer Jim Chalmers said it will focus on reforms that will increase productivity, reduce living costs and lift wages.

"We need to ensure our competition policy setting are fit for purpose in the face of the big shifts underway in our economy so we can make the most of digitisation, the growth in services [and] the net zero transformation while supporting our nation's most vulnerable," Dr Chalmers said.

The review has been launched on the eve of the release of the intergenerational report, which is expected to show the economy slowing in the next four decades as the population ages, migration slows and demand for all forms of care increases.

The report is anticipated to look closely at the productivity challenge amid an anticipated doubling in the nation's care workforce, with services traditionally seen as a low-productivity sector.

A government source said that productivity is slowing internationally as services become an increasingly dominant feature of economies, and this will likely lead to lower real incomes globally.

Assistant Minister for Competition Andrew Leigh said the competition review would be driven by a "clear eyed goal of improving productivity and putting downward pressure on the cost of living".

"If we looked at our business sector, we haven't seen the same degree of dynamism that show on the sporting field over the last decades. We've seen a rise in the gap between cost and prices," he said.

"That may be a reason why the last decade was the lousiest decade of productivity growth that we've measured in the post-war era."

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Reserve Bank of Australia governor Philip Lowe has identified the nation's poor productivity performance as a key weakness that could hamper sustainable wages growth. He has said that increased productivity is needed to back pay gains that outstrip inflation.

Dr Leigh said the government had already acted to boost competition by increasing penalties for anti-competitive conduct and unfair contract terms.

"[But] we're open to new ideas and certainly we don't claim to have a monopoly on wisdom. We want to see a market of ideas flourishing," he said.

A competition taskforce based in Treasury has been established to conduct the two-year review. It will be advised by an expert panel that includes Grattan Institute chief executive Danielle Wood and former Australian Competition and Consumer Commission chair Rod Sims.

Dr Chalmers said the government will not be waiting two years for the review to be completed but will consider and act on ideas developed by the taskforce as they arise in a "methodical...sequenced way".

"If there are opportunities to do parts of this agenda sooner rather than later, we're open to that," he said.