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Australia’s economy has become less dynamic and productive, and the weight and complexity of regulation is key to explaining this trend.
OCTOBER 2026
The Stagnant Nation: Lifting Australia's Dynamism
The past two decades have seen sustained declines in key measures of dynamism across the Australian economy, including in new business formation, job switching, investment and innovation. The result has been a less productive economy and lower economic growth that has reduced Australians’ real wages and living standards.
To better understand this challenge, the AICD has again engaged Mandala Partners to investigate Australia’s dynamism challenge in detail and explore pragmatic reform options to reverse this trend.
This new research builds on Mandala’s 2025 analysis for the AICD on the impact of the weight and complexity of federal regulation ($160 billion and counting: The cost of Commonwealth regulatory complexity).
The AICD and Mandala have published two resources as part of this research:
- The Stagnant Nation: Lifting Australia's Dynamism – A detailed report by Mandala which presents the research, methodology and modelling to support key policy recommendations.
- Snapshot: The Stagnant Nation – A concise Snapshot highlighting the key findings and AICD priority reform actions for Government.
On 12 November 2026, the AICD will host a complimentary webinar for members. Catherine Livingstone AC FAICD, Philip Moffitt MAICD, Adam Triggs (Partner, Mandala) and Mark Thirlwell, AICD’s Chief Economist, will discuss the report's findings and their implications for boards, businesses and policymakers.
Key findings
1. Australia has experienced marked deterioration across the five key dimensions of economic dynamism over the past two decades: technology adoption and innovation, new business formation, industry concentration, investment and job mobility.
The research finds that:
- business research and development (R&D) expenditure as a share of GDP has declined from 1.3% in 2010 to 0.9% in 2022;
- non-mining investment as a share of GDP has declined from 12% in 2005 to 8% in 2025;
- the contribution of new firms to the economy has declined by 6% a year since 2010;
- the job mobility rate has declined from 12% in 2005 to 8% in 2025.
Australia is performing worse than peer developed countries across key areas of dynamism, including investment and R&D expenditure.
2. The decline in dynamism is directly contributing to poor productivity and weak economic growth. Australians are experiencing the effects through declines in real wages and weaker per capita GDP growth.
3. The weight and complexity of federal regulation is a key part of explaining Australia's declining dynamism. While other factors play a role, one of the most significant changes over the past two decades has been the build up in regulatory volume and complexity.
4. There is a significant opportunity to start reversing the decline in dynamism through tackling the burden of regulation:
- Returning measured regulatory burden to late-2000s levels could lift GDP by at least $20 billion a year over the next decade.
- The largest estimated gain comes through improving regulation surrounding business entries and exits.
AICD Policy recommendations
The report outlines a practical set of reforms to start reversing the trends in dynamism. The recommendations are supported by Mandala analysis and modelling.
- Theme 1: Fix the regulatory foundation
- Theme 2: Move the needle now
Establish a taskforce to review regulation
Establish a joint industry public sector taskforce responsible for making regulatory-specific reforms to boost economic dynamism across the economy. The taskforce would be led by an independent chair and work with industry to identify regulations that are most troublesome and recommend targeted reforms.
Adopt the PC’s ‘pillars’ inquiries recommendation
The Productivity Commission has completed five inquiries and has made 47 recommendations that would improve productivity in Australia. These should be implemented to help support enduring productivity growth.
Expansion of NCP and NPF
The National Competition Policy (NCP) and National Productivity Fund (NPF) should be expanded to the levels reached in the 1990s to encourage genuine and meaningful state reforms.
Remove Group 3 from climate reporting obligations
Remove Group 3 entities from the climate reporting regime would benefit approximately 3,000 organisation and result in savings of $2 billion across four years.
Extend the Automatic Mutual Recognition (AMR) to all occupations
Extend AMR to all occupations with potential savings of up to $142 million per year.
Add real consequences to approval shot clocks in the Environment Protection and Biodiversity Conservation (EPBC) regime
Attach a consequence to every statutory clock in the EPBC regime, either a deemed approval or an automatic fee refund if the regulator does not decide in time. Returning to average approval time frames in 2000 would save the economy $4.3 billion per year, with savings ranging from $0.5 billion for shorter timeframes to $7.1 billion for eliminating all procedural delays.
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