"The Intergenerational Report (IGR) released by the Federal Treasurer Jim Chalmers today, provides welcome insights into the direction of the Australian economy; the challenges we face and the opportunities of which we can take advantage," Innes Willox, Chief Executive of the national employers' association Ai Group said today.

"The additional focus in the latest Report on the tasks involved in achieving net zero emissions and in adequately adapting to climate change are critical additions to the current IGR. This challenge is added to the inexorable path of demographic pressures, the geopolitical shifts and the challenges presented by technology, and the continuing growth of new centres of economic power and influence.

"Productivity improvements have become increasingly difficult to achieve and there is a greater need to walk the productivity talk across a wider spectrum of policy areas.

"Among other areas, Australian productivity improvement is being held back by poorly-designed regulation; the growing inflexibility in industrial relations arrangements; and by tax systems that are inadequate to meet Australia's fiscal challenges and that are an active deterrent to investment and business rationalisations.

"We cannot adequately deal with improving our lagging productivity if the Government takes these productivity improvement levers off the table by rejecting the need for comprehensive tax reform, by adding to the complexity of regulatory burdens; and failing to focus on productivity in its industrial relations changes. Ai Group urges all governments to magnify their focus on productivity improvement across these and other policy areas.

"The IGR recognises the importance of increased workforce participation both as a contributor to economic growth and as a central path to greater access to more diverse opportunities for Australians. The strong increase in workforce participation over recent decades limits the scope for further progress in this area, although such gains are well worthwhile pursuing.

"Our population increase, now increasingly dependent on immigration, also remains an important source of further advances.

"There is clearly an ever more central role for productivity improvements in achieving Australia's economic, environmental and social ambitions.

"With considerable justification, the Government can point to the medium and longer-term agenda in the areas of education and training that it is developing with the cooperation of the states and territories. Done well, this agenda has the potential to add to substantial and ongoing improvements in Australia's productivity.

"Similarly, the Government can take credit for moving decisively towards providing greater clarity about the path to net zero emissions and the associated regulatory and industry development directions. While further fleshing out is clearly required, the greater certainty provided is fundamental to lifting business investment in support of the net zero ambition," Mr Willox said.

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