Raising productivity growth is essential to sustain further improvements in living standards, given headwinds from population ageing and the decline in Australia's terms of trade. But underlying productivity growth has slowed in Australia and other OECD countries over recent decades, raising key questions about the nature of the slowdown and the scope for public policy reforms to revive productivity growth.

Against this background, Treasury's Firming Up Productivity in Australia project will exploit newly available firm-level data sources to conduct policy-relevant research into the micro-drivers of labour productivity growth – i.e. capital deepening, innovation and adoption, resource reallocation and business dynamism – to provide a stronger micro foundation to the Australian growth narrative.