UQ experts weigh-in on economic reform

Over 3 days, leaders from politics, business, unions and community – including UQ Professor of Economics Flavio Menezes – will discuss policies to improve Australia’s economic outlook. 

Their focus will be on resilience, productivity, budget sustainability and tax reform. 

We’ve asked some UQ experts to weigh-in on the challenges facing the Australian economy and the measures that could be taken to try to address them.

Professor Marta Indulska

Director of Research of UQ Business School

Australia needs a national strategy, backed by investment, to build sovereign AI capability, boost digital literacy and enable AI adoption.

Artificial Intelligence offers Australia an unprecedented opportunity to lift productivity, but the results will depend on how pervasively we embrace AI and how well we innovate with it.

While big companies typically have resources to experiment with emerging technologies if they show value potential, most Australian businesses are small to medium enterprises (SMEs).

SMEs contribute over a third of Australia’s gross domestic product but they often do not have the spare time, relevant expertise or the money to experiment with AI.

This is a critical issue that Australia needs to address to ensure broad productivity gains.

Putting in place support mechanisms to enable SME adoption of AI, together with an uplift in digital literacy for the entire workforce, is urgently needed.

At the same time, Australia must invest in sovereign AI capability to shape its own future.

To be a resilient nation, we need local tools, data infrastructure and research expertise.

Many critical areas – healthcare, cybersecurity and autonomous systems – stand to benefit from AI but are too sensitive to rely on overseas providers.

We need homegrown AI to reduce vulnerabilities, protect national interests and support economic growth through a stronger tech, research, and startup ecosystem.

Professor Flavio Menezes

Director of the Australian Institute for Business and Economics at The University of Queensland

Australia is a far more prosperous nation today than when I first arrived in Australia to take up a lectureship at the Australian National University over 3 decades ago.

That prosperity rests heavily on the difficult reforms of the 1990s.

Back then, we understood that our competitiveness as a medium-sized open economy meant pulling every lever available. Sadly, that mindset has faded. 

Instead of building a single national economy, we continue to fragment it – slicing our small economy into 8 smaller pieces.

At the roundtable, I will recommend harmonising technical standards as a low-cost, low-risk, high-impact reform.

But more than that – it’s a test of our seriousness about building a single, competitive national economy, whether in standards, occupational licensing, transport restrictions or procurement rules.

Professor Christopher O’Donnell

School of Economics

In Australian public debate, it is important to distinguish between productivity (output quantity divided by input quantity), profitability (revenue divided by cost) and profit (revenue minus cost).

The distinction is important because the 3 measures can move in opposite directions.

For example, in the first decade of this century, profits in the Australian mining industry increased as productivity fell.

Measures of productivity include labour productivity (output divided by the quantity of labour) and total factor productivity (TFP) (output divided by the quantity of all factors of production).

Governments often focus on labour productivity. This is problematic. One of the easiest ways to increase labour productivity is to use more capital or natural resources in the production process.

It follows that efforts to increase labour productivity can lead to over-capitalisation and over-exploitation of natural resources.

Governments would do better to focus on TFP.

If the government wants to improve both TFP and profits, it should pursue policies that maintain or increase rates of technical progress (through research and development), improve technical efficiency (by investing in education and training) and strengthen the production environment (by building public infrastructure).

Professor John Quiggin

School of Economics

Covid-19 is a serious economic problem for Australia, not only as a major cause of death, but because of serious impacts in productivity.

With the effective abandonment of most forms of reporting, it is hard to assess the prevalence and impact of Covid-related morbidity. However, there is substantial global evidence of increased worker absenteeism associated with both acute Covid-cases and post-Covid conditions (long Covid).

As is now well understood, Covid-19 is an airborne virus. However, workplace health and safety policy has not adjusted significantly from the initial phase of the pandemic in which it was assumed that transmission was primarily via droplets.

In the absence of appropriate measures to reduce the risk of Covid-19 transmission, employers are in breach of their legal obligation to maintain a safe working environment. With the abandonment of mask and vaccination requirements, improved air quality is the only practical option for reducing workplace transmission.

A sustained policy effort to improve ventilation in workplaces and other public buildings is one of the few remaining policy responses available to mitigate this threat.