Tim Colebatch has lifted the lid in this matter to great good effect in commenting on RBA governor Glenn Stevens' recent 'Adapt or die' speech. (Slides from this speech may be viewed here.)

'Stevens flick-passed [the question of how to raise productivity] to the Productivity Commission, saying it had published a list of reform proposals. Governments, he said, should "go get the list, and do them".

'Sorry, governor, but the commission's last reform wish list was published in 1996. Its chairman, Gary Banks, has named some fields ripe for reform in recent speeches - ''labour market policies; the taxation system; business start-ups, development approvals and land-use changes; red tape'' - but Banks has survived 14 years as chairman by speaking fluent nuance, rather than unnerve governments with his own reform agendas.

'The OECD, far away in Paris, has no such inhibitions. Every year it publishes a list of reform priorities for its members. For Australia, its 2011 list was:

* Infrastructure: build more, but choose it more carefully. Project selection should follow ''rigorous and published cost-benefit analysis''.

* Foreign investment: remove screening for investments under $1 billion, and be more transparent about why decisions are reached.

* Tax reform: Cut income tax rates, cut corporate tax rates, and raise the GST. Reform state taxes on housing.

* Participation: Encourage workforce participation by lifting the threshold for income tax (as the Labor government has since done) and reduce effective marginal tax rates.

* Childcare: Lift benefits for children under school age, but limit them to parents who are employed or searching for work.

'But the benefits of these may be long-term. And for many companies, the crisis is now'.

Henry's own view is that all of these suggestions would help, but it is the current pressure on just about everyone that will cause productivity to rise, as it did in the 1980s and 1990s.

But government must establish the appropriate narrative if economic pressure is to result in people working harder and smarter, and thereby raising productivity.  Governments, like those headed by Kevin Rudd and Julia Gillard that resort to handouts and massive but obviously wasteful spending schemes in attempts to stimulate economies in times of trouble, send exactly the wrong messages to both managers and workers.