How directors can empower boards to drive productivity growth

Australia, like many of its advanced economy peers, has a growth problem. Indeed, in recent years, productivity has gone backwards.

We know from the AICD’s own Director Sentiment Index (DSI) that directors too are increasingly concerned by Australia’s productivity woes. According to our latest survey, directors rank productivity growth second only to global economic uncertainty as the top economic challenge currently facing Australian business.

And directors rank productivity growth as the most important issue for the federal government to address in both the short and long term. With the productivity crisis and economic reform high on the national agenda, the AICD is increasingly focused on the role boards can play in lifting productivity levels, both within our own organisations and across the economy generally.

Productivity Commission inquiry

The AICD has provided a submission to the Productivity Commission’s Five Pillars inquiry and is engaging with the Commission at senior levels to support the government’s growth agenda, including examining how targeted reforms can drive a more dynamic and resilient economy.

Our key messages include that the cumulative weight of federal and state regulation is crowding out the capacity of organisations and boards to focus on strategy and long-term value creation, and there is an urgent need to rebalance regulatory settings through targeted reforms. Many directors have mentioned this sentiment to me.

These reforms should include addressing the legislative complexity of the Corporations Act and rebalancing the burden of corporate reporting requirements. Our submission also touches on the Commission’s other pillars of skills — the digital economy and net zero transition. You can access the full submission here.

Economic reform roundtables

The government’s national economic reform roundtables (ERRs), to be held in Canberra this month, raise expectations of a bolder economic agenda, canvassing new ideas to address Australia’s productivity malaise, build economic resilience and strengthen budget sustainability. We welcome the government’s focus on these pressing challenges and will advocate for genuine reform to support Australian businesses and their boards.

An encouraging start is that Treasurer Jim Chalmers and Finance Minister Katy Gallagher have directed regulators across government to put forward “significant, material and measurable actions to reduce compliance costs without compromising standards”. This draws on the UK experience where regulators have committed to a 25 per cent reduction in the compliance burden.

The AICD will be participating in the ERRs in various ways, including by lodging a submission with Treasury prior to the ERRs and participating in a coalition of business peak bodies (now over 30) led by the ACCI, Ai, BCA and COSBOA, which will provide a consolidated joint submission to the government and participate in ERR discussions.

The AICD has been conducting our own series of roundtables with members, to ensure our ongoing advocacy and consultations representing your interests are informed by the deep expertise and knowledge of senior directors. The productivity challenge is also a key feature of AICD’s FY26 regulatory reform priorities.

The AICD is also among industry bodies represented on ASIC’s Simplification Consultative Group, set up to simplify and consolidate ASIC’s work, including regulatory guidance and legislative instruments. It will also identify the highest-priority, most useful potential law reforms to address complexity in the regulatory framework.

ASX Corporate Governance Principles

With businesses under increasing regulatory pressure and private markets booming, we welcome the opportunity to participate in the ASX review of the process for setting and reviewing the ASX Corporate Governance Principles.

Due to report at the end of this month, the specialist review panel will examine ways to improve mechanisms for developing the principles to ensure they are effective and useful for the Australian listed market into the future.

The focus must be on maintaining the global competitiveness and appeal of Australia’s listed markets, with principles that are less prescriptive, while upholding strong governance and transparency.

As always, if you would like to contribute to AICD’s policy leadership agenda, please reach out to our policy team at policy@aicd.com.au.

Empowering boards to drive growth

Fifty-nine per cent of directors surveyed in the DSI see regulatory requirements and red tape as the biggest factor affecting their board’s risk appetite, and many smaller organisations lack the resources, time and/or skills to comply with an expanding and complex set of regulatory requirements.

In the context of an increasingly volatile global environment, addressing Australia’s productivity decline is one of the greatest challenges we face. Without serious commitment and substantive action to reducing the weight of regulatory burden on our businesses and NFP companies, this is a challenge we won’t be able to meet.

We need to free Australian boards from meeting agendas dominated by risk and compliance issues, to enable them to maintain a steadfast focus on growing the Australian economy and helping our businesses remain competitive.

It is time to “take some lead out of the saddlebags”, so Team Australia can compete more effectively internationally and drive domestic productivity and prosperity for our companies and communities.

This article first appeared under the headline 'Productivity challenges' in the August 2025 issue of Company Director magazine.