Productivity Commission chair Danielle Wood has called for a review of the Albanese government's workplace reforms, saying it “doesn't make sense” to leave workplace relations out of the commission's inquiry into corporate dynamism. Wood's remarks add to growing calls for an economic shake-up, as Prime Minister Anthony Albanese and Treasurer Jim Chalmers scramble to pare back spending to put downward pressure on interest rates.
In an interview with this masthead, Wood said the sheer scale of red tape had surprised her, noting that boards spend 55 per cent of their time on compliance, up from 24 per cent a decade ago. The commission's report blamed more than a decade of excessive regulation for dulling the economy's “animal spirits” and said Australia's economy had become increasingly stagnant.
The commission's terms of reference, overseen by Chalmers, excluded workplace relations and tax despite “many inquiry participants” citing industrial laws as key to improving productivity. “It doesn't make sense to leave a big area like workplace relations totally off the table,” Wood said.
Labor and unions argue the changes, including multi-employer bargaining and same-job-same-pay laws, have bolstered wages. The Coalition, backed by economists who favour lower regulation, says the laws have further clogged the economy.
Wood praised Labor's reforms to environmental approvals and streamlining regulations but said the government should review the impact of its workplace changes. "It would be good practice to review how those are working with a particular focus on productivity impacts," she said.
The report recommends cutting red tape, refining insolvency and financing systems, and improving management skills to US standards, which could boost productivity by nearly 10 per cent.
Separately, Reserve Bank deputy governor Andrew Hauser said the world had entered a more volatile and uncertain period as the global economy was hit by higher tariffs, geopolitical tensions, technological change and environmental challenges. “That means inflation is likely to be pushed off target; economic forecasts are more likely to be wrong and policy trade-offs get uglier,” he said.
Independent MP Allegra Spender called for winding back the tax concession for EV purchases and slowing infrastructure spending to ease inflation. UNSW economics professor Richard Holden backed her call to tackle the EV concession and said Chalmers should push ahead with a road user charge, though Albanese is reportedly not in favour.
Analysis
Why This Matters
- The call from the government's own productivity watchdog chair adds weight to complaints that recent workplace reforms may be hurting economic growth.
- With the RBA warning of subpar growth and inflation risks, pressure on the government to adjust policy is intensifying.
- The outcome of any review could reshape Australia's industrial relations landscape, affecting wages, business costs and employment.
Background
The Productivity Commission is the government's independent research and advisory body on economic and social issues. It was asked to examine Australia's productivity performance, but the terms of reference set by Treasurer Jim Chalmers excluded workplace relations and tax, two areas many participants told the inquiry were central. Labor came to power in 2022 and has introduced significant workplace changes, including multi-employer bargaining. Wood was appointed to the commission by Chalmers in 2023.
Key Perspectives
Danielle Wood (Productivity Commission chair): Says excluding industrial relations from the inquiry "doesn't make sense" and that the government should review how its workplace reforms are working.
Labor and unions: Argue the workplace changes have successfully boosted wages.
Coalition and business-aligned economists: Say the laws have increased red tape and hurt economic dynamism.
Allegra Spender (independent MP): Called for winding back the EV subsidy and slowing infrastructure spending to ease inflation.
Richard Holden (UNSW economics professor): Backed Spender's call and said a road user charge would be disinflationary, though Albanese is reportedly against it.
What to Watch
- Whether the government responds to Wood's call by widening the inquiry or announcing its own review of workplace reforms.
- The upcoming budget meetings, with Albanese delaying COP travel to focus on spending cuts.
- Any shift in RBA policy if productivity growth fails to improve and inflation persists.
Checked
12 claims in this story checked against 1 source: 12 supported.
Show each claim
- SupportedProductivity Commission chair Danielle Wood called for a review of Labor’s workplace reforms.WA Today - Latest News: “Wood has warned that Labor’s workplace reforms should be examined to assess their role in Australia’s economic malaise”
- SupportedWood said it “doesn't make sense” to exclude workplace relations from the inquiry.WA Today - Latest News: ““It doesn’t make sense to leave a big area like workplace relations totally off the table.””
- SupportedThe RBA warned of subpar growth.WA Today - Latest News: “Days after Reserve Bank governor Michele Bullock warned of a “new normal” of subpar growth”
- SupportedWood’s call added to calls for an economic shake-up as Albanese and Chalmers scrambled to pare back spending to put downward pressure on interest rates.WA Today - Latest News: “Wood’s call to review workplace reforms adds to growing calls for an economic shake-up, including from within Labor, as Albanese and Chalmers scramble to pare back spending to put downward pressure on interest rates.”
- SupportedWood said the scale of red tape surprised her and that boards spend 55 per cent of their time on compliance, up from 24 per cent a decade earlier.WA Today - Latest News: “She said her biggest surprise after three years in the job was the sheer scale of red tape... She cited the fact that boards spend 55 per cent of their time on compliance – up from 24 per cent a decade ago.”
- SupportedThe commission’s report blamed more than a decade of excessive regulation for dulling the economy’s “animal spirits” and said the economy had become increasingly stagnant.WA Today - Latest News: “a Productivity Commission report was published, blaming more than a decade of excessive government regulation for dulling the economy’s “animal spirits”.”
- SupportedThe inquiry’s terms of reference, overseen by Chalmers, excluded workplace relations and tax despite many participants saying industrial laws were key to productivity.WA Today - Latest News: “the terms of reference for the commission’s review, which are overseen by Treasurer Jim Chalmers, did not include workplace relations or tax despite “many inquiry participants” saying industrial laws were key to firing up productivity.”
- SupportedLabor and unions said the workplace changes bolstered wages, while the Coalition and economists favouring lower regulation said the laws had further clogged the economy.WA Today - Latest News: “Labor and unions say the changes have succeeded in bolstering wages. The Coalition, backed by economists who prefer lower regulation, argue the laws have further clogged up Australia’s sclerotic economy.”
- SupportedWood said it would be good practice to review the workplace changes, focusing on their productivity impacts.WA Today - Latest News: ““Given the number of changes the government has introduced to the system in recent years, it would be good practice to review how those are working with a particular focus on productivity impacts.””
- SupportedThe report recommended cutting red tape, refining insolvency and financing systems, and improving management skills to US standards, which could boost productivity by nearly 10 per cent.WA Today - Latest News: “The commission’s report recommended cutting red tape, refining the insolvency and financing systems, and improving the skills and qualifications of Australian management to US standards, which could boost productivity by nearly 10 per cent.”
- SupportedHauser said the world had entered a more volatile and uncertain period, and said inflation was likely to be pushed off target, forecasts more likely to be wrong and policy trade-offs uglier.WA Today - Latest News: “He said the world had entered a more volatile and uncertain period as the global economy was hit by a “fusillade of shocks” such as higher tariffs, geopolitical tensions, technological change and environmental challenges. “That means inflation is likely to be pushed off target; economic forecasts are more likely to be wrong and policy trade-offs get uglier,” he said”
- SupportedSpender called for winding back the EV tax concession and slowing infrastructure spending to ease inflation.WA Today - Latest News: “Independent MP Allegra Spender told ABC TV that Labor should wind further back a generous tax concession to EV purchases – a lower price cap was introduced in the May budget after enthusiastic uptake – and slow spending on infrastructure to alleviate inflation.”