Australia's accountants are warning sluggish productivity levels are threatening the nation's living standards, economic growth and competitiveness.

CPA Australia, the peak professional accounting body, says the federal government must take steps now to lift productivity levels instead of kicking the can down the street.

"Australia is running out of time. If productivity continues to stagnate, living standards will go backwards and the economy will struggle to sustain growth," CPA business and investment lead Gavan Ord said.

"This is not an abstract policy debate. Weak productivity ultimately means lower wages growth and fewer opportunities for Australian businesses and workers."

In its submission to a parliamentary inquiry, CPA has called for an overhaul of the complex Australian tax system and for cutting red tape to improve efficiency

"Our tax system is increasingly complex, uncompetitive and misaligned with where the economy is heading," Ord said.

"Continuing to avoid meaningful tax reform is a deliberate choice to accept weaker productivity and slower growth.

"Red tape is not just an inconvenience – it is a direct drag on productivity. Governments must stop treating regulation as the default response and start proving that non‑regulatory options have been exhausted."

The CPA also pitched into the debate over the impact of government spending levels pushing down private sector investment and dragging productivity down.

The concerns are timely ahead of May's federal budget, with the Albanese government warning today spending must be reined in.

Finance Minister Katy Gallagher told Today this morning "a big effort is going on" by ministers to find savings.

She also said the government would weigh up calls for the scrapping of the capital gains tax in the lead-up to the budget.

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