Concerted effort is needed by government to resolve issues spanning from slow project approvals through to lifting infrastructure spending to avoid a slowdown in the economy as the resources boom eases.
The pipeline of new investment projects has fallen to $877 billion from $921 billion, the Business Council of Australia said on Thursday.
Perhaps more importantly, projects under consideration now stand at an estimated $159 billion - down 30 per cent over the past year and 43 per cent over the past two years.
As a result, a variety of measures to cut project costs are necessary to ensure existing projects are completed on budget and that work begins on a new round of projects to help sustain the economy.
"The most immediate challenge in continuing economic growth is how we manage the transition from the peak of the resources boom, and pulling out all stops to deliver on the investment pipeline is critical," council president Tony Shepherd said.
"Those [countries] who had the GFC [global financial crisis] have shed their fat," Woodside Petroleum chief executive Peter Coleman said at the release of the BCA report. "[Australia] didn't make the structural changes others were forced to make." As a result, other countries will rebound strongly, which underscores the need for ongoing reform in Australia, he said.
The Productivity Commission this week called for streamlining of government approval processes, including establishing a single project assessment and decision process across federal and state governments to remove duplication as well as clarify often competing compliance demands. As part of this, the commission advocated statutory time limits be imposed on assessments for projects, as well as making the process more transparent.
The decline in productivity has been most marked in the mining sector, which reflects the difficulty of managing costs in a high-demand environment.
"No one is advocating changes to wages and the wage structure," Mr Shepherd said.
Rather, the issue is labour productivity, which ranges from rostering and work practices, through to government planning and approval processes.
"We have no option but to address these issues," Leighton chief executive Hamish Tyrwhitt said.
The incoming federal government needed to ensure these issues were tackled jointly by federal and state governments to sustain growth, the group said.