AICD submission on Productivity Commission inquiry on the five pillars of productivity - Interim Reports

We commend the Commission for its thorough analysis in the Interim Reports and broadly support many of the draft recommendations. In our submission, we have provided targeted reform examples in response to the Commission’s recommendations and information requests, aimed at making a meaningful contribution to Australia’s productivity growth.

Our key points under each of the pillars are as follows:

Pillar One: Creating a dynamic and resilient economy

• The AICD welcomes the Commission’s compelling findings on the impact of over-regulation on Australia’s productivity and strongly supports the case for a regulatory reset. These findings reflect consistent feedback from directors that excessive regulation dampens risk appetite, limits investment, and distracts boards from strategic growth.
• We endorse draft recommendations 2.1 to 2.3 as essential steps toward reform. In particular, we support:
  • A whole-of-government commitment to regulatory reduction, including a 25% burden reduction target by 2030.
  • Enhanced regulatory practices that promote growth, competition and innovation.
  • Stronger oversight of regulation, including standard consultation periods and mandatory post-implementation reviews.
• We also call for the appointment of a Minister for Better Regulation to drive accountability and reform across government.
• In its final report, we urge the Commission to prioritise simplification of key laws - such as the Corporations Act - and consider establishing an independent expert body to support long-term reform. We also support increasing large proprietary company reporting thresholds, recently endorsed by ASIC.
• As part of our submission, we’ve provided updated legal advice from Allens confirming the uniquely high-risk environment faced by Australian directors. Reform is essential to enable boards to focus on growth and productivity, not just compliance. The advice is available here.

Pillar Two: Building a Skilled and Adaptable Workforce

• The AICD supports the Commission’s draft recommendations (3.1–3.4) to reform occupational entry regulations (OERs) across states and territories, including removing those with limited public benefit. We back the use of National Competition Policy and the proposed National Productivity Fund to incentivise meaningful reform within agreed timeframes.
• We also recommend the Commission provide an estimate of funding needed to support OER reform and address how overseas skills and qualifications can be more efficiently recognised across a broader range of occupations.

Pillar Three: Harnessing data and digital technology

• The AICD supports the Commission’s draft recommendations 1.1 and 1.2 as sound approaches to managing AI risks while fostering innovation and regulatory clarity. We agree that mandatory guardrails for high-risk AI (recommendation 1.3) should only apply where existing frameworks are insufficient and new, technology-neutral regulation is not feasible.
• However, we do not support draft recommendation 3.1 regarding alternative privacy compliance pathways, which may increase complexity for entities. Instead, we propose a revised ‘fair and reasonable’ test under the Privacy Act Review to improve outcomes and reduce regulatory burden.
• We strongly support draft recommendation 3.2 to avoid introducing a right of erasure in the Privacy Act. Given the uncertain productivity costs and limited privacy benefits, we recommend pausing broader Privacy Act reforms and prioritising simplification of existing data retention laws.
• Finally, we support draft recommendation 4.1 to mandate digital financial reporting, contingent on a robust Treasury-led consultation. This process should include a cost-benefit analysis, international benchmarking, and a phased implementation to ease the transition for preparers.

Pillar Four: Delivering Quality Care More Efficiently

• The AICD strongly supports greater alignment in quality and safety regulation across the care economy. Streamlining regulation will improve efficiency and deliver better outcomes for care users.

Pillar Five: Investing in Cheaper, Cleaner Energy and the Net Zero Transformation

• The AICD supports consistent national policy to guide emissions reduction and enable long-term investment in clean energy. We support reforms to environment laws, broader Safeguard Mechanism coverage with careful implementation, and measures to unlock private investment in climate adaptation - provided they align with ongoing work on insurance access and affordability.