Up to $900 million will be up for grabs under a new National Productivity Fund announced by Treasurer Jim Chalmers on Wednesday.
"It's all about rewarding states with more revenue, where they deliver meaningful and measurable economic reforms," he will say at the Australian Business Economists event in Sydney.
States and territories will have a "menu of options" to chose from, including streamlining commercial planning and zoning.
Also singled out was dismantling hurdles to modern construction techniques, which is aimed at improving the quality and speed of building by embracing digital technologies and offsite manufacturing.
Housing affordability remains a key focus for the federal government, with rents rising and a nationally-agreed target to build 1.2 million new homes in danger of falling short.
The treasurer deliver the wide-ranging speech on productivity on the same day as official wage numbers were scheduled for release, expected to show further moderation from the 4.1 per cent annual growth through to June.
Spelling out his government's overarching approach to boosting productivity, he 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 will say.
Housing affordability remains a key focus for the federal government, with rents rising. (Dave Hunt/AAP PHOTOS)
Productivity growth is key to advancing living standards and is achieved by pursuing more efficient ways of producing goods and services.
But Australia's productivity performance has been flagging for a while, averaging just 1.1 per cent a year in the ten years to 2020 - slower than the decade before, and roughly half the rate achieved during the 1990s.
To turn this 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 will say in his speech.
"That GDP boost represents about $5000 per household, per year," he will say.
"While not every option modelled by the PC will become policy, we want to make meaningful progress where we can."
As well as incentivising states and territories to do their share via the fund, the federal government will pursue its own reforms.
One priority flagged by the treasurer was developing a right to repair, a legal right for owners of devices and equipment to freely modify and fix them.
Weak productivity growth was flagged as pressing economic issue by Australian company directors in a survey released on Wednesday, along with the high cost-of-living and elevated interest rates.
The latest Survey by the Australian Institute of Company Directors showed sentiment dropping to its lowest point since the COVID-19 pandemic.
The number of directors believing a recession was likely within the next 12 months has leapt higher to 46 per cent, up from 31 per cent last survey.
