ICT students should face higher university fees commensurate to their expected high salaries, the Productivity Commission (PC) has advised as it hands down a major report that includes 71 recommendations for overhauling Australia’s digitisation, migration, education, and more.

Aiming to improve the targeting of higher education investment, the PC’s latest five-year Productivity Inquiry report Advancing Prosperity recommends a range of education policy changes including a restructure of university fees that would, the report notes, boost student contributions “to recoup a greater share of the costs of university from those who benefit from attending university, rather than recouping this from the broader tax base.”

The policy change would reverse a 2020 government overhaul of university fees, which raised the price of some degrees and lowered the price of others – including ICT courses – as it sought to boost the number of students pursuing degrees in critical areas such as ICT.

It’s just one of dozens of recommendations contained in the report – it spans nine volumes – which was delivered a year after it was requested by then Treasurer Josh Frydenberg and five years after the delivery of the first report, Shifting the Dial.

The 1,019-page report includes dozens of recommendations across five key areas – including building an ‘adaptable workforce’; harnessing data, digital technology and diffusion; creating a more dynamic economy; lifting productivity in the non-market sector; and securing net zero and adapting to a changing climate at least cost.

Noting that the decade to 2020 saw annual labour productivity growth at its lowest level in 60 years – just 1.1 per cent, compared with 1.8 per cent from 1960 to 2020 – boosting these areas will be crucial to resolving what the report calls a “productivity predicament”

“The seemingly entrenched slowdown in the rate of productivity growth…. has an outsized effect on the long-term future prosperity of Australians,” the report warns, by shrinking the overall “economic pie” and forcing Australians to work more to afford “fewer goods and services”.

“Productivity flatlined under our predecessors during the wasted decades and Australians are paying a price for that,” Treasurer Dr Jim Chalmers said, taking a stab at a previous Coalition government that, he said, “did not fully implement any of the recommendations of the last five-yearly review.”

“Making our economy more productive is all about lifting incomes and living standards, and creating more opportunities for more people in more parts of our country,” Chalmers continued, arguing that the current Labor Government’s focus on “stability and certainty” would help capital “flow towards areas where we have advantages and opportunities to underpin a more modern industrial base.”

ACS welcomed the tech focus of the report.

“It is good to see the Productivity Commission’s recognition that a broader embrace of digital technology can transform the way the economy operates,” said ACS Chief Executive Chris Vein.

“For Australia to maintain its high living standards and place in the world we must embrace both current and emerging technologies. We believe transformation is happening more quickly than the Productivity Commission.

"Our annual Digital Pulse report forecasts 1.2 million technology workers by 2027 rather than 2035. That underscores the need for improved IT education and the reduction of barriers for workers looking to retrain into the sector."

Harnessing data for growth

Adoption of digital technologies will be critical to reversing the productivity slump. Yet while many key digital recommendations sound familiar – including improving regional internet connectivity, boosting transparency around digital infrastructure funding decisions, better cyber security – the report also recommends the introduction of secure digital identities that would facilitate more access to and use of public data by “trusted private parties”.

Government agencies should, for example, use data to benchmark business performance and promote more purposeful data sharing; reduce barriers to trade; loosen security and citizenship requirements to recruit overseas public sector workers; and “[promoting] no-cost of low-cost access to ideas that have large public good value” by making mandatory standards freely available, and requiring open access for government funded research in journals, papers, and publications.

Improving the flow of data will, the report argues, be key to improving Australia’s dismal innovation rankings – including 78th globally for knowledge diffusion and 52nd for knowledge absorption.

And while they have shown initiative in digitising, the PC notes, governments often struggle with “slow, piecemeal, disorganised and inconsistent” execution – and should embrace best practice and support ‘innovation diffusion’ by helping the 98 per cent of businesses that “do not operate at the technological frontier”.

Most Australian companies adopt product and process innovations that are “not new to the world”, the report says, noting that “diffusion is where most of the innovation action is” and arguing that innovation is as much about helping businesses implement existing ideas as it is about inventing completely new things.

Better education, easier migration

To improve the strength and relevance of Australian education, recommendations range from the unsurprising – such as promoting best-practice teaching and leveraging digital technology to improve teaching, learning, and assessment – to potentially contentious issues, such as developing a new university funding model that would set student contributions “based on average expected earnings for each field of study, with students with a greater capacity to repay incurring more debt.”

Such policies would directly impact students pursuing careers in high-paying industries like IT but would, the report argues, help build a service-driven graduate workforce in which, by 2028, nine out of ten jobs will require a tertiary education.

Universities should also reform their recognition systems to provide a ‘nested qualification’ for students who withdraw from their undergraduate courses early, the PC advises while supporting targeted “light-handed and simple performance incentives”, better teaching quality, and improved visibility through regular costing of tertiary teaching and research.

Overcoming systemic problems in Australia’s migration system is another key focus of the report, with recommendations including the removal of list-based restrictions for the Skilled Independent visa; abolishing the Business Innovation & Investment visa program; facilitating collaboration between national licensing bodies to streamline recognition of international qualifications; and taking an “occupation by occupation approach” to judge the value of skills assessments.

“The fiscal risk associated with migration relates mainly to permanent migration of older age groups,” the analysis notes during net present value calculations that flagged the surge in visas for software and applications programmers, ICT Business and Systems Analysts while noting that employer sponsored migration “is not always used for higher skilled occupations”.

These and the myriad other recommendations – shaped by the more than 200 submissions received during the inquiry period – will be the subject of considerable debate as the government works to tweak Australia’s innovation ecosystem to boost productivity during challenging economic times.

The recommendations “will stack the odds of productivity growth in Australia’s favour,” Productivity Commission chair Michael Brennan said, noting the “significant promise” of digital technologies in boosting business productivity.

“The potential of data sharing remains relatively untapped,” he added, “and increased utilisation will facilitate innovation that lowers costs while improving the quality of service delivery for consumers.”