Australia will enter a twilight era of economic lethargy and lower standards of living if the Productivity Commission’s stark warnings go unheeded.

“This report should serve as a wake up call of the dangers of handballing the hard tasks of real reform to subsequent generations,” ACCI chief executive Andrew McKellar said.

“If Australia stays on its present course, and fails to kickstart productivity growth, future incomes will be 40 per cent lower, and the working week five per cent longer. We simply cannot allow that to happen.

“Australia has slipped behind other nations, down ten places in the OECD’s productivity rankings in the five decades to 2020. It’s time to arrest that trend.

“Lifting productivity is the only way we will be able to afford the healthcare, education and disability support programs that Australians expect. And it’s the only pathway to being able to pay for the AUKUS program announced this week.

“Australia needs to get back on a path of strong productivity growth to sustain a high level of economic activity over the long term. We need to be doing much better than what has been the case for the past 20 years.

“By removing impediments, and better incentivising individuals and businesses to be innovative and invest, Australia can support an entrepreneurial business culture that is dynamic, resilient and competitive.

“Tax reform is fundamental. Australian businesses need a tax system that delivers the right mix of incentives that will make them globally competitive, stimulate investment in research and development, and support them in becoming more efficient and productive.

“The regulatory system must make it easy for businesses to establish, operate and grow in a dynamic, technology-driven economy. The primary aim must be on fit-for-purpose regulation that is simple and outcome-focused, rather than complicated and prescriptive.

“The ongoing digitisation of the economy is another enabler of productivity. Investment in software, information technology, digital literacy and innovation, particularly for newer firms, and small and medium enterprises. Digitisation offers businesses of all sizes in all sectors opportunities to grow and create jobs.

“A labour force that gives businesses access to the skills they need to innovate and the flexibility to improve the way they operate is essential. Getting the education and training settings right will be critical. We endorse the Productivity Commission’s call for better teaching and innovation in the education sector, and a more effective use of skilled migration.

“All this needs to occur amid a background of achieving net zero carbon emissions and the energy challenges that brings.

“This is a moment to be seized so we can leave subsequent generations a better Australia.