The federal government says productivity will be a key pillar in tonight's budget.

The Treasurer Jim Chalmers says a "productivity package" will incentivise states to adopt reforms aimed at speeding up housing approvals and construction.

The Productivity Commission says regulation is adding up to $320,000 to the cost of an average home, and it's urging the government to embrace wider economic reforms.

• Guest: Danielle Wood, Chair of the Productivity Commission.
• Producer: Jason Whittaker