Teachers and doctors will be the key targets of a five-year blueprint for a productivity revolution to be unveiled by Treasurer Scott Morrison on Tuesday.
The 1000-page report is the first in a series commissioned by the Treasurer to complement the five-yearly intergenerational reports.
Mr Morrison told a business audience last month that rather than providing a wish list of measures arranged in no particular order, the Productivity Commission had identified "a new direction for an inclusive agenda", one that would require buy-in from the states as well as the Commonwealth.
Entitled Shifting the Dial, the review is understood to conclude that the next big gains in productivity will come, not from making people work harder, but from rearranging the delivery of health and education.
In health alone, the gains could exceed $100 billion over the next few decades. Importantly, the report finds these could be delivered by rearranging the way health dollars are spent rather than spending more.
Government figures who have seen the report say it concludes that poor health represents one of the biggest brakes on Australia's labour supply, with men in poor health 63 percentage points less likely to be part of the workforce than men in excellent health.
Although Australia has one of the highest life expectancies, the 10 years spent in ill-health is one of the longest periods in the developed world.
People in very good health can earn hourly wages 18 per cent higher than those in poor or fair health. Poor mental health reduces hourly wages for men by about 5 per cent.
Men with nervous or emotional conditions earn 35 per cent less than average, while men in chronic pain earn 15 per cent less.
The report is understood to recommend that low-value health procedures be defunded and that health professionals be paid on the basis of results rather than the number of services provided. Regularly published data would enable consumers to better choose between health systems and health providers.
On education, schools would be encouraged to hire teachers with real-world knowledge of topics such as mathematics. trained with only short teaching courses. Teachers without specialist knowledge of fields such as maths would receive special training.
The programs would be delivered in partnership with willing states rather than through the Council of Australian Governments, whose resolutions require the approval of all state governments.
Other recommendations are believed to cover the efficiency of cities and opening access to government and private data, including giving consumers ownership of their own data.
Mr Morrison is likely to stress that although the recommendations are specific, they can't be implemented without the support of the states, several of whom face elections in 2018. The need for consultation and ownership by the states means that many of the recommendations are unlikely to be implemented until well after the federal election due in late 2018 or 2019.
Peter Martin is economics editor of The Age.
