Productivity inquiries to explore corporate tax reform, digital reporting

As Australia’s productivity performance sits at half-century lows, the Productivity Commission (PC) has outlined 15 priority areas for reform within Australia's economy to drive productivity growth.

Peak accounting body CA CANZ has welcomed the PC’s decision to focus on digital financial reporting as one productivity-boosting priority area.

“Digital reporting is an area we’ve been advocating for some time, and we’re thrilled it’s now getting the attention it has long deserved in the Australian policy landscape,” Amir Ghandar, CA ANZ reporting and assurance leader said.

“It’s a concern that Australia has fallen behind in this space – 90 per cent of the world’s leading economies have already mandated digital reporting.

“We are living in the stone age, with Australia’s pdf and paper financial reports not much better than the papyrus paper used for accounting 7,000 years ago in terms of their communicative value for today’s retail and sophisticated investors.”

The PC said that digital financial reporting could enhance efficiency, transparency and accuracy in financial reporting. By embracing more efficient technologies, firms across the economy could see productivity benefits.

CA ANZ has called for a mandate on digital reporting and warned that Australian businesses were missing out on international investment due to their outdated systems.

“Without a mandate on digital reporting, Australian markets and companies are effectively invisible to many international institutional investors using new AI technologies to trawl structured data sets for opportunities. It means we’re missing out on potential inflows of capital in an already very constrained global financial environment,” Ghandar said.

“There are also many opportunities for digital reporting technology to streamline company reporting into government, reducing inefficiencies and duplication.”

The PC also earmarked corporate tax reform as priority area they would explore as part of their bid to resuscitate Australia’s floundering productivity growth

“It’s really important for productivity that we have investment, that we invest in the capital and the tools and the technologies that actually allow us to produce more for each hour of labour that we work,” PC chair Danielle Wood told ABC RN Breakfast.

“We’re looking at the corporate tax rate as one way to think about stimulating investment.”

Fixing Australia’s productivity growth would be key to boosting living standards, the Productivity Commission has said.

“Boosting productivity is the only sustainable way to improve Australians’ living standards, but productivity growth has stagnated in the past decade. It’s now at its lowest ebb in 60 years,” Wood said.

The Business Council of Australia (BCA) has been among the voices calling on the government to target corporate tax reform as a productivity-boosting measure.

In an April letter to the government, the BCA slammed Australia's tax system as uncompetitive and weighing on productivity. They pointed out that businesses paid $143 billion in company tax over the last year, but said that Australia has one of the least competitive tax systems among comparable nations.

“We’ve burdened our economic engine room with countless new pieces of regulation and red tape,” the letter added.

BCA said Australia’s productivity could be boosted if reforms made Australia an easier place to do business and a more attractive location for investment.

Public consultation on the productivity reforms will be open from Monday 19 May to June 6 on the Productivity Commission website.