'Productivity problem' putting living standards at risk

Australia has a productivity problem and workers are on track to work longer for less pay if nothing changes, the treasurer says.

Previewing the five-yearly productivity inquiry ahead of its formal release, Treasurer Jim Chalmers said productivity growth had reached its slowest point in 60 years, averaging 1.1 per cent a year.

"Australia has a productivity problem," Dr Chalmers told the Committee for Economic Development of Australia event in Brisbane on Thursday.

The Productivity Commission's 1000-page inquiry, to be released in full on Friday, will paint a troubling picture of Australia's productivity performance, which is linked to future prosperity and living standards.

If productivity growth had stayed at its 60-year average, national incomes per person would have been about $4600 higher in 2020.

And, if Australia fails to kickstart productivity growth and stays on its present course, future incomes are expected to become 40 per cent lower and the working week five per cent longer.

Australia is also falling behind other nations.

While many advanced economies have experienced sluggish productivity growth in the past few decades, Australia slipped 10 places in the OECD's productivity rankings between 1970 and 2020.

Originally due later in the year, Dr Chalmers has opted to release the comprehensive report ahead of the May budget.

The report's recommendation will be nested across five areas:

* Building a more skilled and adaptable workforce;

* Harnessing data and digital technologies to drive productivity;

* Improving economic dynamism through competition and efficiency in markets;

* Lifting productivity in the non-market sector, and;

* Reaching net zero while limiting the productivity drag caused by climate change.

"These groupings are useful to us, and they align pretty closely with what I've been talking about over the last nine months - about the opportunities of the energy transition, the possibilities of data and digital, and the big shift to services, particularly the care economy," the treasurer said.

Dr Chalmers said budget constraints meant the government wouldn't "pick up and run with every recommendation", noting some suggestions would not align with the government's priorities and values.

"We don't believe productivity gains come from scorched earth industrial relations, for example, or from abolishing clean energy programs," he said.

Opposition employment spokeswoman Michaelia Cash said Labor should not focus on a "combative" industrial relations system if it wanted to lift productivity growth.

"The best way to improve productivity is to encourage businesses and their employees to work together for their mutual benefit," she said.

"Labor believes that the only way to get wages moving is to encourage conflict."

The treasurer also flagged an overhaul of the Productivity Commission as an institution, noting its structure and remit hadn't changed in 25 years.

"This could mean a more strategic focus on how we maximise opportunities in areas of economic transformation, including the shift to net zero," he said.

He said the way productivity was measured needed reform.