Edition 43, April 2007

Potential benefits of the national reform agenda

The Council of Australian Governments' National Reform Agenda has the potential to significantly raise national output and incomes in Australia, according to a Productivity Commission study released recently.

The study, Potential benefits of the national reform agenda, examines the benefits potentially available in the long term from further enhancing competition in key infrastructure areas, reducing regulatory burdens on business, achieving more cost-effective health services and raising workforce participation and productivity.

The Commission found that reforms aimed at improving productivity and efficiency in energy, transport and related infrastructure and reducing the regulatory burden on business, if fully implemented, could increase gross domestic product in time by up to around $17 billion or nearly two per cent.

In addition, 'human capital' reforms to enhance workforce participation and productivity - targeting health promotion and disease prevention, education and training, and work incentives - could potentially yield even larger gains, depending on program implementation costs (which were not modelled and will depend on Governments' decisions about specific measures).

The Commission found that all jurisdictions would receive increased tax revenues flowing from reform-induced growth. For the competition and regulatory reform streams, Governments' combined net revenues could rise by as much as $5 billion, with a 60:40 split between the Australian Government and state and territory governments, respectively.

Potential net revenue outcomes are more speculative for the 'human capital' reforms, varying significantly across different reform areas and requiring case-by-case assessment taking into account program outlays.

For more information and copies of the research paper visit www.pc.gov.au/research/crp/nationalreformagenda

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