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AAP

November 26 2012, 1:59PM

PERTH, November 26 AAP - Australia will find it difficult to achieve meaningful economic growth without boosting productivity through micro-economic reform, National Australia Bank chairman Michael Chaney says.

Mr Chaney, who also chairs Woodside Petroleum, said labour market reform was urgently needed to restore the balance.

"I'm concerned that if we don't manage to lift our productivity we're going to find it very difficult to achieve any real economic growth," Mr Chaney told the In the Zone Conference in Perth on Monday.

Over the past decade Australia had achieved acceptable levels of growth due to high terms of trade, high levels of investment and strong population and workforce growth.

He said capital productivity growth had been very poor, partly because it makes time for income to flow from investment in major projects.

"So capital productivity is depressed," he said.

"In addition to that ... capital productivity is lower than it ought to be because of over-regulation and difficulty getting projects up and inefficient project management, rushing projects and having costs blow out and so on.

"And with labour productivity, growth has simply not been there.

"One of the reasons for that is that the current industrial relations legislation works against productivity growth."

He said enterprise agreements created a disincentive for innovation as the workforce stepped back and allowed unions to work out agreements with employers which was the opposite of what happened in 1996 under workplace agreements.

"Employers found productivity grew far more than they expected."

He said further tax reform was also needed.