Ambitious yet practical national reforms are needed to address Australia’s productivity and economic challenges.
The Australian Institute of Company Directors (AICD) has lodged a comprehensive submission to Treasury as part of the government’s consultation on economic reform, building on our earlier submission to the Productivity Commission’s Five Pillars Inquiry.
This consultation provides critical input into the Treasurer’s upcoming national Economic Reform Roundtable, scheduled for 19–21 August, which will address three fundamental challenges: Lifting productivity; building economic resilience and strengthening federal budget sustainability.
Our recommendations draw directly from the insights of Australia’s director community, including input from two recent roundtables chaired by the AICD’s CEO and Managing Director, Mark Rigotti, which were attended by senior chairs and directors. We acknowledge and thank members for their valuable contributions, along with Policy Advisory Committees and Division Councils which have helped shape these recommendations.
The case for change
Australia’s economic prosperity has historically been underpinned by significant structural advantages – abundant natural resources, strong demand from Asia, a skilled and expanding workforce and accessible housing and education. However, many of these foundational strengths are under pressure.
The nation faces intensifying budget pressures, deteriorating housing affordability, demographic ageing and growing skill shortages – all amid a more contested geopolitical environment. Simultaneously, traditional drivers of growth across sectors are weakening, climate impacts are escalating and technologies like AI are rapidly transforming work.
There is, however, an opportunity to position Australia to build a sustainable, future-facing economy by increasing business investment and innovation in high-growth and frontier sectors – such as quantum and advanced sustainable manufacturing – where Australia has natural strengths.
Directors consistently identify productivity as the nation’s top priority, according to the AICD’s Director Sentiment Index. [1] Yet Australia continues to underperform relative to global peers on key indicators of regulatory efficiency and competitiveness. The OECD’s Product Market Regulation indicators show Australia lags behind the OECD average for alignment of our regulatory framework and international best practice.[2]
Imbalanced regulation imposes real and compounding costs on organisations – which are ultimately passed onto Australians in the form of higher prices, lower quality goods or services or reduced productivity in service delivery.
These challenges reinforce the need for ambitious, yet practical, reform to deliver budget -neutral productivity reforms that also enhance economic resilience in an uncertain geopolitical climate.
Australian directors have expressed their readiness to collaborate with government, industry, unions and civil society to meet the challenge to deliver long-term, positive national outcomes.
AICD recommendations for reform
The AICD recommends the government develop an overarching vision guided by a system-wide framework (refer Figure 1) to avoid the risk of piecemeal, fragmented reform.
Key recommendations include:
1. Economy-wide regulatory stocktake and simplification: A national goal to reduce regulatory costs for business by 25 per cent by 2030 and simplification of the Corporations Act.
2. Accelerate AI capability and digital innovation: Urgent progress on Australia’s National AI Capability Plan in partnership with industry and the establishment of regulatory settings that facilitate innovation in AI use.
3. Better regulation processes: Reforms to regulatory impact analysis, strong post-implementation reviews and expanding the Regulatory Initiatives Grid to an economy-wide view.
4. Develop an Australian business model to boost investment: A national business model framework that maps current sector strengths, identifies emerging high-growth sectors, and outlines long-term capability investments to build sovereign capabilities. This in turn will help make Australia more economically resilient and globally competitive.
5. Reset national education and skills: A national skills agenda aligned with industry needs, prioritising national occupational licensing, and improving student literacy and numeracy performance.
6. Secure fiscal sustainability: Establishing a credible medium-term fiscal framework, rebalancing the tax system, and strengthening federal-state fiscal coordination.
Industry groups collaborate for national reform
The AICD also contributed to a joint submission with a coalition of 27 industry bodies, coordinated by the Business Council of Australia. This collaboration focused on shared priorities, including the growing compliance burden on boards, and demonstrated the collective voice of the business sector ahead of the Economic Reform Roundtable.
This work is part of the AICD’s broader commitment to ensuring director voices are present in national policy debates, while continuing to provide leadership on our core governance mission.
First Productivity Commission interim report released
The first of the five interim reports from the Productivity Commission, Creating a more dynamic and resilient economy, was released on Thursday 31 July, with feedback invited by mid-September.
The AICD welcomes the Commission’s acknowledgement that over-regulation puts a significant brake on productivity growth through the disproportionate inhibition of economic dynamism and resilience and endorses its recommendations for better regulation.
Several of the AICD’s key recommendations are reflected in the interim report, including the call for a whole-of-government regulatory reform agenda, stronger oversight of regulatory impact analysis and the use of Statements of Expectations for regulators to embed growth and innovation objectives.
Next steps
The AICD will continue to engage with Government on these important reforms and be an active participant in future rounds of consultation by the Productivity Commission on its Five Pillars inquiry, which is due to report by the end of 2025. The AICD will continue to encourage the Government to take a bold, ambitious approach that creates an enabling environment for a fair and prosperous Australia.
[1] AICD (April 2025), Director Sentiment Index Survey – 1st Half 2025. Page 22. Available here.
[2] OECD (2024). Product Market Regulation (PMR) indicators: How does Australia compare? pp.1-2, available here. Note: This uses the OECD PMR database for 2023/2024 and 2018/2019.
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