Australia has more than 7500 standards to ensure its products and services are safe.
But a Productivity Commission interim report has found more than three-quarters do not have an equivalent international standard, 40 per cent of those in legislation are obsolete or superseded and only one in four are consistently implemented by the states, territories and Commonwealth.
As a result, Australia's labelling requirements for infant formula differ from those in Europe, the US and Hong Kong, which makes local manufacturers less competitive in those export markets.
Swedish furniture giant IKEA has also pointed to differences in packaging standards from overseas frameworks, and inconsistencies across states and territories impose unnecessary costs and undermine the efficiency and scalability of recycling efforts.
Differences in flooring standards between states and territories are the source of the flooring sector's "greatest inefficiencies", the Carpet Institute of Australia has found.
The consequences are so far-reaching aligning standards across Australia with overseas requirements could be worth almost $4 billion a year - potentially raising GDP by 0.2 per cent, the Productivity Commission found.
Harmonising standards would improve compatibility and increase competition by allowing more overseas-designed products to be sold in Australia, increasing competition, while reducing costs through economies of scale.
It would also pave the way for productivity gains by giving Australians earlier access to new technologies and improving public welfare by making it easier to acquire less expensive medical devices.
Treasurer Jim Chalmers welcomed the interim report and acknowledged standards reform could help Australians save and ease burdens on businesses.
"We've made good progress in some areas but there's more to do," he said.
The independent government advisory body also recommended states and territories join an automatic mutual recognition scheme for workers who require specific licenses for their jobs, allowing them to move freely across Australia to places where their skills are most needed.
These recommendations could be considered when Dr Chalmers convenes his economic roundtable later in August.
During the event, a range of experts are expected to discuss ways to lift living standards for Australians by boosting productivity, building resilience and strengthening the budget.
Proposals by other groups include increasing GST to 15 per cent, slashing property investor tax breaks and leaning on artificial intelligence.
