On 18 June, two events took place at the same time. On the surface, they had little in common.

Those events were the Early Years Summit in Brisbane, and the Treasurer’s address to the Press Club in Canberra on Labor’s goals for enhancing national productivity. What threads bind these two things together? And how could they together change the game for future generations?

A roadmap to a better future

In his Press Club address, the Treasurer gave the reason why productivity is so high on the Commonwealth agenda – and it was nothing to do with business.

Rather, he spoke of:

… an obligation to future generations to deliver a better standard of living than we enjoy today. That’s really why productivity matters. (i)

Meanwhile, at the Early Years Policy Summit, Minister for Social Services Tanya Plibersek, Minister for Early Childhood Education Jess Walsh, philanthropic funders, academics, advocates, and practitioners all turned their minds to how to achieve better outcomes for our youngest Australians, that will endure as they grow up and become parents themselves.

Notable at the Summit was the representation of philanthropic funders making substantial and long term investments into systemic change rather than isolated programs, including partners in the Investment Dialogue for Australia’s Children, a groundbreaking 10-year collaboration between government and philanthropy to improve the health and wellbeing of children. The Summit also hosted the launch of Phase 3 of the Thriving Queensland Kids Partnership, a cross-sectoral coalition committed to systemic change for Queensland children which has now been funded for a further three to five years.

Himadri Deka, a member of the Investment Dialogue for Australia’s Children Community Leadership Council, reflected after the event that “a critical question consistently surfaced: Despite a wealth of evidence on what truly works, why aren’t we doing better?” (ii). The latest results of the Australian Early Development Census underscore this question, with all five census domains going backwards in 2024.

Why aren’t we doing better?

The Treasurer has called for a Economic Reform Roundtable, a forum for a double handful of the country’s best thinkers to find solutions that will lift Australia’s game. The Productivity Commission are investigating five “pillars of productivity”, and Ministers have been tasked with undertaking their own consultations to feed into this productivity jamboree.

Thus far, much of the media coverage has focused on tax reform and changes to the housing system. Businesses wait in the wings, wondering what kind of deregulation might be on the table.

We say that focusing only on the big productivity levers of old, or failing to grasp them with enough ambition, would be a missed opportunity. The current headline topics – tax reform, the housing market, business deregulation – are important and necessary, and we applaud the Treasurer’s willingness to convene this discussion. But they will not be sufficient to achieve the Treasurer’s goal of intergenerational fairness and equity without a change in our approach.

The true message of both the Treasurer’s speech and the Early Years Summit is that we can no longer defer deep structural change if we want our children to enjoy the same quality of life we do, and ensure a resilient economy in the face of looming demographic changes. We need to stop pretending that we can find magic answers with no losers, and take a bit of pain now to support a better future after we are gone.

Chalmers already knows that the time has come to rebalance things in favour of our children, and the generations coming up behind them. It might have been independent Sophie Scamps who brought forward a Wellbeing of Future Generations Bill this year, but clearly Labor was listening.

Have another look at the five reform areas identified for the Treasurer’s roundtable. Dynamic and resilient economy? Skilled and adaptable workforce? Harnessing emerging technologies? Net zero? Care economy? These are all issues where Australia needs to quickly get on the front foot, yes: but there is also potential here to create nation-building initiatives for the long, long term.

How we Measure What Matters - productivity in a care economy

This goes to a deeper question, of how we value and measure the value of care in our society. Social services and the care economy are notoriously resistant to traditional measures of productivity designed for, as the Productivity Commission puts it, “things you can drop on your feet” (iii). Traditional frameworks and measures send misleading signals about efficiency and quality, and are prone to creating perverse incentives and unintended consequences (iv, v).

Social services don’t operate well as markets. Where government is the primary, often only, commissioner or purchaser of services, their actions have an outsize effect on the market. In a monopsony, the buyer can set prices, as the NDIS are currently doing with their service caps and travel fees. Higher costs are not reliably associated with better quality (vi,vii). Rural, remote and regional areas are typically under-serviced, reducing equity and compounding disadvantage (viii).

Australia is not the only country grappling with how to measure productivity in the care and social sector. There are lessons to be learned from the UK, New Zealand, and others. There are other lessons in our own recent history, for example, the Productivity Commission’s 2021 report Advances in Measuring Healthcare Productivity, which found that quality improvements in areas such as cancer treatment and cardiovascular disease drove 3% annual growth (ix).

There are indications that the Commonwealth believes they have at least part of the answer. At the Early Years Policy Summit, newly minted Minister for Social Services Tanya Plibersek echoed the need for governments to help instead of hinder:

How do we make it our default approach to help communities … organise their voices, then ask what the community needs, and then work out how to deliver it? (x)

Andrew Leigh, Assistant Minister for Productivity, Competition, Charities and Treasury, earlier in the month addressed the Chifley Research Centre with a focus on trade-offs, tough decisions, and better execution.

If we’re serious about delivering on progressive goals, we have to make hard decisions – and be honest about them. The problem isn’t a lack of wealth, or ideas, or demand. It’s the quiet accumulation of obstacles. Many of the gains … will come from fixing the parts of the machine that slow everything down. (xi)

This appetite for removing friction must go beyond business to look deeply at the social sector, where government’s own commissioning, funding and reporting structures contribute to concentrating power away from communities and holding systems in place.

Productivity with purpose

The Treasurer wants higher productivity as a route to intergenerational fairness, but the thinking that has brought us to here won’t get us to a better future.

The Centre for Policy Development set out this challenge in their 2025 discussion paper Productivity with Purpose: Clear pathways to a more equitable future:

“Pursuing productivity for its own sake risks an acceleration of the trajectory that has led us to intersecting crises: climate breakdown, inequality, high cost of living, housing shortages, environmental degradation, compounded by a loss of trust in institutions and global instability. These are all connected and primarily driven by our current political economy. CPD sees the government’s focus on productivity as an opportunity to shift how we think about it, not as a narrow measure of output, but as a tool to build an equitable, inclusive, and sustainable society.” (xii)

And we need to ensure young people are part of this shift, given that up until now they have been notably absent from the conversations in which adults decide what they will trade against a future in which none of us will need to live.

At the Early Years Policy Summit, Polyglot Theatre’s Voice Lab asked young attendees of the neighbouring arts festival what they thought hope meant. One young festival-goer replied that “hope means to believe that something good is going to happen to you”.

Let’s all hope the signals coming from Chalmers, Plibersek, and Leigh are indications that second-term Labor is ready to shift gears and make generational change.

Diana Harris, Lead for Operations ARACY

 

(i) Chalmers, J (2025) Address to the National Press Club, Economic reform in our second term https://ministers.treasury.gov.au/ministers/jim-chalmers-2022/speeches/address-national-press-club-canberra

(ii) Deka, H. (2025) Shaping Australia’s Future: Insights from the National Early Years Policy Summit. https://www.linkedin.com/pulse/shaping-australias-future-insights-from-national-early-himadri-deka-chdrc/?trackingId=z192aOdsQhWZsfm7pvSX6Q%3D%3D Sydney.

(iii) Productivity Commission April 2021, Things you can’t drop on your feet: An overview of Australia’s services sector productivity, PC Productivity Insights, Canberra, April.

(iv) Cree, V, Jain V, and DP Hillen. 2019. “Evaluating Effectiveness in Social Work: Sharing Dilemmas in Practice.” European Journal of Social Work 22(4) 599–610.

(v) Warner, M and Zaranko, B, 2022, NHS funding, resources and treatment volumes, The Institute for Fiscal Studies, United Kingdom. vi Cornell-Farro S. Improving measures of school education and output productivity in Queensland. July 2019. Queensland Productivity Commission.

(vii) The Front Project and Manda, 2024 Paving the Path: addressing marker imbalances to achieve quality and affordable childcare in more places. https://www.thefrontproject.org.au/impact-foundry/research/331-addressing-quality-and-affordable-ecec Melbourne.

(viii) National Rural Health Alliance (2024). Social Determinants of Health in Rural Australia Fact Sheet. https://www.ruralhealth.org.au/wp-content/uploads/2024/11/NRHA-Social-Determinants-of-Health-Factsheet.pdf.

(ix) Productivity Commission. 2024. Advances in Measuring Healthcare Productivity. Canberra: Australian Government.

(x) Plibersek, T (2025). Address to the National Early Years Policy Summit 18 June 2025. https://www.tanyaplibersek.com/ media/speeches/national-early-years-policy-summit/ Brisbane.

(xi) Leigh, A (2025). Address to the Chifley Research Centre 3 June 2025. https://ministers.treasury.gov.au/ministers/ andrew-leigh-2025/speeches/address-chifley-research-centre-melbourne. Melbourne.

(xii) Centre for Policy Development (2025) Productivity with Purpose: Clear pathways to a more equitable future, CPD discussion paper.