AICD calls for modernised regulation in landmark productivity inquiry

The AICD advocates for better regulation and policy settings to enable growth, innovation and investment as the Productivity Commission examines Australia's long-term economic challenges.

When the Productivity Commission launched consultation on 19 May 2025, proposing 15 priority reform areas across five productivity “pillars” it opened an important dialogue about Australia’s long-term economic challenges. Commissioned by the Federal Government, these pillars span regulation, workforce capability, digital innovation, care services, and the net zero transformation.

The AICD lodged its submission in response on 6 June 2025, with a focus on better regulation and the policy settings needed to enable growth, innovation and investment. While addressing all five pillars, the AICD’s submission prioritised:

• Pillar 1 – Reducing the regulatory burden on business; and
• Pillar 3 – Harnessing data and digital technology, particularly the implications of proposed Privacy Act reforms and support for a shift towards outcomes-based regulation.

Rebalancing regulation to drive productivity and growth

Members consistently tell the AICD that Australia has become an increasingly difficult place to do business, including making capital investments and driving innovation. A central concern amongst directors is that the cumulative weight of federal, state and local regulation is crowding out the capacity of organisations, and their boards, to focus on strategy, growth and long-term value creation.

The AICD’s submission reflects a clear message - that Australia’s regulatory and policy environment must be modernised to support business dynamism, investment and productivity. While there is no silver bullet, proportionate and forward-looking reform across all five pillars represents a critical opportunity to strengthen Australia’s economic foundations for the future.

Key AICD positions by pillar

1. Creating a dynamic and resilient economy

The AICD submission highlights the regulatory complexity and inefficiency hampering business dynamism. Persistent issues include dense and inaccessible legislation such as the Corporations Act 2001, burdensome director liability settings and outdated corporate reporting thresholds, and lack of review and modernisation of laws – with many not updated for decades.

To address these challenges, the AICD argued for a whole of government ambition to reduce compliance costs, a revitalisation of the Regulation Impact Statement process, and modernising the Corporations Act with the aim of delivering a more agile, proportionate and risk-based regulatory framework. Refer to our better regulation priorities for further details.

2. Building a skilled and adaptable workforce

Labour and skills shortages remain a top concern for directors, particularly in sectors critical to innovation and the energy transition, including healthcare, construction, technology, and sustainability. The AICD supports reforms to better align training with workforce needs, improve occupational licensing, and enhance labour mobility. The Commission’s inquiry into national licensing is a first promising step.

3. Harnessing data and digital technology

The AICD welcomes efforts to modernise digital regulation but has expressed concern that the proposed Privacy Act reforms may increase compliance burdens without clear productivity gains – especially for SMEs. The AICD recommends a pause to the implementation of further Privacy Act Review proposals to allow for a full cost-benefit analysis. AICD also strongly supports a transition to a more flexible, outcomes-based privacy regulatory framework that works in a digital-led world.

Regarding artificial intelligence, the AICD urges government to finalise the National AI Capability Plan, provide clearer guidance and implement targeted guardrails for high-risk AI applications where needed to address regulatory gaps.

4. Delivering quality care more efficiently

Major regulatory reform and ongoing financial pressures continue to add complexity to human service providers such as aged and disability care and early childhood services. The AICD supports implementation of the Not-for-profit Sector Development Blueprint and a broader review to streamline regulation while ensuring care quality and accessibility.

5. Investing in cheaper, cleaner energy and the net zero transformation

For the net zero transformation, clear, consistent national climate policy remains essential to unlocking private capital for the energy transition. Directors consistently identify policy uncertainty as a barrier to investment. The AICD supports reforms to the Environment Protection and Biodiversity Conservation Act 1999 to enable faster, more consistent environmental approvals while maintaining strong protections.

The AICD also calls for enforceable national standards, greater procedural clarity and periodic review of climate policies including the safeguard mechanism. Both climate and nature-related issues will be highlighted at the AICD’s upcoming Climate Governance Forum on 8 August 2025.

Next steps and ongoing engagement

The Commission is expected to release interim reports for each inquiry between July and August 2025, with final reports due to the Government in December following a second round of consultation. In his recent address to the National Press Club, Treasurer Jim Chalmers outlined that productivity will be embedded as a core focus for this parliamentary term and flagged he would also write to government regulators “seeking specific, measurable actions to reduce compliance costs without compromising standards”.

The Treasurer announced that the upcoming productivity roundtable will be held on 19-21 August and will focus on three things:

• Shaping the direction for long term economic reform;
• Building consensus on reform priorities for this term of government and beyond; and
• Setting out guiding reform principles and next steps to advance the agenda.

In contrast to the large Jobs and Skills Summit convened in 2022, this roundtable will be hosted in the Cabinet room in Canberra. It will have a targeted agenda with a smaller group of attendees from government, business, unions, civil society and experts. The agenda, key issues and list of attendees will be published ahead of the roundtable. The Treasurer flagged that the Commission’s interim 5 pillars report will be a critical input.

The Treasurer also announced that the Government will soon open a consultation for targeted submissions through Treasury that will allow stakeholders to contribute before and after the roundtable discussions. This presents an opportunity for the AICD to advocate for reforms that underpin long-term economic resilience, including regulatory simplification, skills development, and innovation policy.

The AICD also welcomes any member feedback on focus reform areas to drive productivity at policy@aicd.com.au.