Licence to stall – reforming occupational entry regulations could boost productivity growth
Occupational entry regulations aim to protect consumers, but when they are excessive and inconsistent across states, they restrict productivity growth.
Australia’s productivity growth – the engine of long-term improvements in living standards – has stagnated over the last few years. Since peaking in March 2022, total labour productivity has fallen by 4.7%, resulting in around $136 billion in foregone annual economic output compared to a scenario in which productivity remained unchanged.
While recent economic discussions have understandably been led by the global energy crisis, robust productivity growth is important for a sustainable economic recovery once Australia emerges from this global supply shock.
One channel for enhancing productivity in the upcoming Budget could be the reform of occupational entry regulations (OERs). OERs are legal requirements intended to protect consumers by ensuring that workers delivering goods or services meet adequate quality standards. These requirements may include professional certification, formal education and practical training. For instance, dentists in Australia must complete a minimum 4-year undergraduate degree or a 4-year postgraduate master course at an approved university, and be registered with the Dental Board of Australia.
Although OERs aim to safeguard consumer interests, poorly designed regulations increase the time and financial costs of entering an occupation through extended training and licensing fees. This discourages workers from pursuing certain professions. In Australia, entry into 23 of the top 50 occupations by employment has some form of regulation. This represents 44.0% of total employment across the top 50 occupations in February 2026 (see Chart 1). Of these 23 regulated occupations, six are regulated differently across jurisdictions and represents 9.2% of employment across the top 50 occupations. These inconsistent OERs across states and territories can create additional barriers to workforce mobility, as workers may face additional licensing or training requirements.
These barriers constrain the labour market’s ability to direct people to where they are needed most, restricting competition and weighing on productivity. Typically, these costs are balanced against the benefits to consumers an OER provides through higher quality products or services. However, there may be many occupations for which OERs are not providing better outcomes for Australians.
This is not to say there should be no OERs. For some occupations, such as health professionals, there is a clear rationale to regulate entry by requiring extensive training and experience due to the irreversible and catastrophic consequences of a medical error.
It is also not the case that nationally regulated occupations do not warrant reform. It may be that a national licensing scheme does not necessarily yield significantly higher quality and safety outcomes. Instead, it could be driving higher prices for consumers as licensing costs disincentivise workers to enter the occupation, limiting supply.
Regulations which are inconsistently applied across states and lack a clear relationship with safety or service quality present the clearest rationale and opportunity for reform. One reform approach would be introducing a harmonised national licensing system for a given occupation so that the same OERs are applied across states and territories.
There is precedent for this type of reform. Less than a year ago in the 2025-26 Federal Budget, the Commonwealth Government announced a commitment to design a national licensing scheme that enables electrical trades people to work seamlessly across borders without reapplying for a separate licence fee.
While this is a welcome step, ongoing efforts to identify and reform poorly designed OERs which are inconsistent across states and territories could contribute to supporting Australia’s productivity growth and improving living standards for Australians.
This newsletter was distributed on 22nd April 2026 . For any questions/comments on this week's newsletter, please contact our authors:
This blog was co-authored by David Li (Economist, Deloitte Access Economics)
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David Rumbens
David Rumbens is a leading expert in macroeconomics and strategic economic advice. As a Partner in Deloitte Access Economics’ macroeconomics practice, he has extensive experience advising government and business leaders on the economic environment, key risks, and long-term strategy. David leads several Deloitte Access Economics subscription publications, including Employment Forecasts, Retail Forecasts and publishes a weekly economic briefing newsletter.
