Treasurer Josh Frydenberg will challenge corporate Australia to finish the proliferation of special dividends and share repurchase aiming to increase the productivity so that $3000 annual lift in worker wages could be made possible. Treasure proposes that board members giving more importance to the short-term shareholders above long term investments are decreasing national productivity rates
The Morrison government is arranging trade war between the United States and China to hit the economy and has also drawn its attention towards increasing productivity growth from 1.1% to 1.5%
Mr Frydenberg mentioned in his speech to the Business Council of Australia “share repurchase and capital returns are becoming common in the businesses but is it always the most suitable option for the growth of company and economy?” he believes, Management and boards will want to be careful around capital allotment but the companies should increase investment in research and development in order to prosper. To see the rising economy, companies must focus on the positive approach to growth and investment
The leading 5 % of firms in Australia are responsible for almost all productivity growth.
Through Treasury analysis, it can be seen that increasing average yearly productivity growth back to 1.5 % would help increase yearly income by $3000 within 10 years. Wages growth has been reduced from 4% to below 2.5 % for approximately five years now.
Mr Frydenberg further added “To afford rising living standards and create further opportunities for the future generation we must handle the productivity challenge”
In his speech, Mr Frydenberg’s will also asks to make productivity an agenda item at the next meeting of state and federal treasurers in October. He will also disclose which projects the government is actively considering to work on, to help raise the economy.