Business leaders slam Productivity Commission dynamism inquiry for excluding tax: 'like a doctor blocked from checking the heart'

Business groups have dismissed a government inquiry into how to help their sector thrive, saying the exercise was doomed when tax settings and workplace laws were ruled out of scope. The Productivity Commission's review of 'business dynamism', which published its interim findings on November 5, was specifically directed by Treasurer Jim Chalmers not to consider tax, industrial relations or business merger laws. Relations between business leaders and the Albanese government are at a low ebb as the sector campaigns against a new minimum trust tax and an overhaul of capital gains tax, both of which critics say would stifle risk-taking and innovation in the private sector.

'The elephant in the room'

Instead of tax, the commission fixed its gaze on complicated regulations, gaps in insolvency laws and barriers to venture capital for start-ups. Andrew McKellar, chief executive of the business group ACCI, said these were worthy topics but the terms were too narrow: 'Assessing business dynamism without looking at tax and workplace relations is like a doctor being blocked from checking the heart or lungs. You can ease symptoms, but you miss what is killing the patient.' Business Council chief executive Bran Black called tax and industrial relations 'the elephant in the room', adding: 'We cannot fix Australia's productivity crisis by tiptoeing around the biggest barriers to investment and higher living standards.'

The commission's interim report found evidence that Australia's businesses are less dynamic than in the past, measured in a drop-off in business entries and exits and job mobility. 'A key driver of productivity growth is the economy's capacity to renew itself through the entry, growth, restructuring and exit of businesses,' the report said, adding that while it is not government's responsibility to create businesses or entrepreneurs, policy settings can help. Its interim recommendations include a 'tell us once' approach to the information businesses must give regulators, and the appointment of an official liquidator as a last resort for companies that cannot fund their own liquidator.

The commission's own summary also proposes clearer regulatory guidance, easier consensual sharing of business data with lenders and investigation of a credit-guarantee scheme. It identifies management capability as another weakness and recommends evidence-based support. Commissioners Alison Roberts and Stephen King said practical reforms should help firms start, adapt, grow and close without unnecessary friction. The final report is due in May 2027.