Nature fundamentally underpins Australia’s economic productivity – and yet nature is not being taken seriously as an asset in need of serious public and private investment.
Background
The Senate Select Committee on Productivity in Australia was established in November 2025 to examine the drivers of Australia's long-term productivity growth and identify opportunities for reform across the economy. The committee is considering issues including productivity performance, regulation, technology, competition policy, tax settings, regional development, and Australia's international competitiveness.
Our submission to the Committee highlights that nature is fundamental to Australia's productivity, yet it is largely absent from national productivity debates. Nearly half of Australia's GDP relies moderately or heavily on healthy ecosystems, which provide essential services such as clean water, pollination, climate regulation, disaster resilience and support for key export industries. At the same time, Australia’s natural capital is continuing to decline because of chronic underinvestment and increasing environmental pressures. Despite the implications for agriculture, regional economies, exports and long-term economic growth, the productivity impacts of nature loss have rarely been systematically considered in policy development.
ALCA's recommendations
Fundamentally, reversing Australia's decline in natural capital will require addressing the long-standing underinvestment in nature by both government and business.
The investment gap is so significant that government investment alone will not be enough. Structural economic reforms are also needed to encourage greater private investment in natural capital. However, private investment should complement - not replace - the sustained government investment needed to protect and restore nature.
ALCA is calling for productivity reform that recognises nature as essential economic infrastructure. Key recommendations include increasing investment in nature and nature-based solutions, redirecting environmentally harmful subsidies, improving nature-related corporate disclosures, strengthening incentives for conservation, and supporting public and private investment in natural capital.
These reforms would help close Australia’s nature investment gap while strengthening the environmental assets that underpin productivity, competitiveness and economic resilience.
For more detail, download our full submission.
Header image: Suthee Pakcharoen/Pexels
