'Gone backwards': Hopes fund can revive home-building

Cutting red tape standing in the way of modular home construction will be rewarded by the federal government via a new fund aimed at spurring states and territories towards a suite of productivity-enhancing reforms.

The $900 million fund is part of the Labor government's broader push to rev up the nation's economic growth and lift living standards.

Treasurer Jim Chalmers will also task the Productivity Commission with five new inquiries, including examining the implications of an ageing population.

"Making it easier for Australians to see a doctor" and "building a world-class health technology assessment framework" were flagged as goals by Dr Chalmers in his speech at an Australian Business Economists event in Sydney on Wednesday.

Grattan Institute program director for economic policy Brendan Coates said the principle of paying states to make competition-boosting reforms was a good one that had worked in the past.

As part of national competition policy reforms in the 1990s and 2000s, the federal government paid states and territories close to $6 billion to undertake reforms later estimated to have boosted GDP by 2.5 per cent.

Yet the design and implementation of the new $900 million national productivity fund was key, Mr Coates told AAP.

"We can't avoid the fact that we have to reach across the Commonwealth-state divide to make these reforms, but working with the states and working out exactly what you're paying for with this fund is going to matter enormously."

Mr Coates welcomed the focus on the construction sector.

"Productivity in the construction sector has gone backwards in recent decades at the same time as productivity across the economy has risen by 50 per cent, so there's clearly a big problem here."

Committee for Economic Development of Australia senior economist Melissa Wilson said encouraging pre-fabricated and modular construction was key to faster, less wasteful and cheaper construction.

Ms Wilson cited a McKinsey study that found prefabrication could cut housing construction times by as much as 50 per cent and reduce costs by up to 20 per cent.

"To maximise the gains from modular housing will require scale and a consistent pipeline of work," she said.

The federal government is under pressure to boost the supply of housing and improve affordability, with rents soaring after the COVID-19 pandemic.

Spelling out his government's overarching approach to boosting productivity, Dr Chalmers said it would not come at the cost of higher unemployment or "by insisting Australians work longer for less".

"We're applying new thinking to the challenge, broadening our ambitions beyond the tired slogans of scorched earth industrial relations," he said.

To turn the "productivity problem" around, the federal government has embarked on a full revitalisation of the nation's suite of competition policies.

Modelling by the Productivity Commission suggests GDP could be boosted by up to $45 billion a year if all opportunities were pursued, Dr Chalmers said.