It is, perhaps, unsurprising that the Australian Productivity Commission has released yet another report arguing that productivity growth needs to pick up, or that its incoming chairman, Peter Harris, has spoken of the need for a "shared commitment to a reform agenda". One would scarcely expect the Productivity Commission to be opposed to productivity, after all. As for reform, we all support it, to the point where it is necessary to put scare quotes around any "reform" measure we want to criticise.

In reality, however, the idea of a productivity-based microeconomic reform agenda is a zombie that needs to be killed once and for all if we are to achieve sustained improvements in living standards for all Australians. The heyday of microeconomic reform was in the 1980s and 1990s when the Hawke, Keating and Howard governments, pushed through a range of reforms including financial deregulation, the removal of tariff protection, National Competition Policy, privatisation of Telstra and the introduction of the GST. Some of these policies were successes and others were failures, but for good or ill, they are mostly in place for the foreseeable future.

The advocates of microeconomic reform have had no new ideas for decades. Rather talk of a new reform agenda inevitably ends up scraping the barrel for items of unfinished business left over from the agenda of the 1980s.

The biggest item of unfinished business is industrial relations. Although unions have been greatly weakened, and security of employment greatly eroded, the failure and repeal of the Howard government’s WorkChoices policies has left Australian workers in a stronger position than their counterparts in most English-speaking countries.

Ordinary Australians understand this. As then BCA chairman Graham Bradley lamented in 2012, Australians assume that "when business leaders talk about productivity growth what they really want is for employees to work harder, for longer hours and lower wages". A striking illustration of this took place in 2011, when treasury secretary Martin Parkinson gave a speech on productivity. Although Parkinson did not mention work intensity, his speech was reported by two different news organisations under the headline "Australians must work harder".

As with everything to do with productivity, this association dates back to the late 20th century. The central theme in talk about a productivity reform agenda is the "productivity surge" that supposedly occurred in the mid-1990s. At the time, this was hailed as proof that microeconomic reform would put Australia on a new growth path. Critics argued that the "surge" was at best a temporary blip and at worst a statistical illusion caused by the increase in work intensity that Howard later described as a "barbecue stopper". They claimed vindication when measured productivity growth slowed in the late 1990s, and then stopped altogether. It’s now clear that, far from surging, the rate of productivity growth has actually been lower since 1990 than in the bad old days before microeconomic reform.

None of this is surprising for those who argued that the supposed surge was an illusion in the first place. But the Productivity Commission has been consistently wrong on the issue. In a 1999 report for example, the Commission acknowledged the possibility of a slowdown, but stated "it is unlikely that the long-term rate of productivity growth would slow as far as the average recorded over the 1970s and 1980s".

As the decline in productivity became more obvious, the denial continued. In 2002, chairman Gary Banks stated "this downturn in productivity is more likely to be short-lived than indicative of a marked slowing in underlying trend". And in 2005, assistant commissioner Dean Parham concluded that "it is premature to declare Australia’s experience of stronger productivity growth to be over." Many more examples could be cited.

Throughout this, the advocates of the productivity agenda rejected the idea that productivity growth was simply code for working harder. But finally, they have begun to admit this. In evidence before the Senate standing committee on economics in 2012, the Commission conceded that work intensity (also described as "cutting the fat of organisations") is an unmeasured source of productivity growth, and stated that the debate "was settled in the mid-2000s".

The problem is, as the experience of the last 20 years has shown, that productivity gains achieved by driving workers harder are not sustainable, except in recession conditions like those of the 1990s. As soon as the labor market recovers, overworked employees will either quit to look for new jobs, or find unofficial and unsanctioned ways of restoring work-life balance.

Genuine long-term improvements in the productivity of the economy can be gained only through educating the workforce to take account of improvements in technology (only a small proportion of which are generated domestically) and through macroeconomic and labour market policies that avoid wasting human potential through unemployment and other forms of social exclusion. It’s time to focus on these issues and bury the zombie agenda of the 1980s once and for all.