Treasurer Jim Chalmers has issued the first statement of expectations to the independent Productivity Commission, explicitly asking it to “take account” of the government’s goal to be “a renewable energy superpower” — a clear contradiction of the PC’s traditional role of sceptically scrutinising government intervention in the economy.
The statement — a tool designed to direct independent agencies about how they should pursue their legislated functions — is the first time a government has sought to push the PC to back a specific industry policy agenda. It raises the very real possibility that the PC will not be able to undertake its role of calling out programs as inefficient or economically counterproductive if it is introduced as part of the “renewable energy superpower” agenda.
“The government expects the PC to take account of the government’s productivity agenda,” the statement says, identifying a more dynamic, competitive and resilient economy, a skilled and adaptable workforce, harnessing data and digital technologies, delivering quality care more efficiently and “getting to net zero and becoming a renewable energy superpower” as its agenda.
The first 4.5 of these are unexceptionable and fit easily into the PC’s traditional work. The final item, however, invokes a specific industry policy agenda that may be at odds with what works best in the Australian economy, in the same way as if the government had declared it intended to be a car manufacturing superpower.
Other aspects of the statement are more positive. The government identifies the services sector as requiring better and more diverse data and analysis, given that “service sectors, especially those with large non-market components … will play an increasingly important role in Australia’s productivity and prosperity”. The PC is on record as noting that even just accurately assessing productivity in non-market service sectors such as health and social care is enormously difficult.
The PC is also being asked to produce “shorter, more timely reports on priority topics” (a trend that has been evident over recent months). It is also being asked to focus more on program evaluation and work with the Australian Centre for Evaluation, the fruit of Labor frontbencher Andrew Leigh’s quest to restore evaluation to a central place in policymaking. The statement also goes to great lengths to spell out expectations that the PC will improve its internal culture, which came under serious criticism in the recent review of its workplace culture.
But other areas of the statement suggest Labor is unhappy with elements of the PC’s independence. It has been told to engage with ministers and other government agencies more, including being asked to “consult on draft findings and policy recommendations”, raising the possibility that hostile departments unhappy with PC recommendations (think DFAT’s economically illiterate obsession with “free trade” agreements under the Coalition) will be given the chance to nobble them in advance, including by getting their minister to do so via the treasurer.
The PC will also have to hand Treasury all documents and briefings provided to other ministers and “keep the secretary to the Treasury appropriately informed of significant meetings between the PC and government ministers and other parliamentary bodies”, bringing the commission more tightly under the Treasury portfolio umbrella. It is also now expected to make sure it consults with trade unions, as well as “experts, industry … investors, service delivery entities, First Nations communities, and the broader community”.
There’s also a sense that Labor doesn’t like the PC merely identifying problems with existing policies. It wants the PC to start talking about the feasibility of implementing its recommendations, flagging that it “will ask the PC to formally consider and report on implementation feasibility and risks as part of the terms of reference for future inquiries, where relevant and appropriate”.
There’s still no clear rationale for such a statement — all of the positive elements the PC is being asked to pursue could have been pressed informally, or are being pursued via the response to the workplace culture review. Instead it looks like the statement has been used to impose a political agenda of the government.
The push for the PC to acknowledge the interventionist renewable energy agenda and allow Treasury to keep better tabs on who it’s speaking to, while establishing a process by which powerful departments can derail PC recommendations, is a significant blow to the independence of the country’s best economic advisers — and ups the pressure on new chair Danielle Wood to show the commission won’t dance to Labor’s tune.
Should Danielle Wood tell the treasurer where to go with his “statement”? Let us know by writing to letters@crikey.com.au. Please include your full name to be considered for publication. We reserve the right to edit for length and clarity.
The usual reasons these bodies are made “independent” is so govts can outsource the hard decisions.
Moreover, given BK thinks Australia has no capacity to make thinks especially complicated things involving robots and lots of power, then the bias in any assessment of industry policy by BK must be seen for it is.
It’s a shame, as industry policy is pretty much bedrock to any nation’s long term economy and getting it right is even more important than the price of money this month. None of those big factories and super fast trains BK just got a tour of – happened in a a void. They were all the result of industry policy. Same goes for the US, Germany and basically every other OECD country which – other than Australia – all pursue industry policy as a central tool to their national economy.
And nowadays the complexity of the climate question makes any late 20th century neoliberal purist approach to industry largely null and void – if not lethal.
Nowadays the inevitable answer of doom to the climate question makes any sort of approach to long-term considerations all but moot.
“The usual reasons these bodies are made “independent” is so govts can outsource the hard decisions.”
but there is the flaw in this argument and sentence. The PC is independent, it says here, but they don’t make any hard decisions. They are a glorified neoliberal think tank and lobby group for business groups like the BCA, ACCI, IAG, etc. They are not part of the Executive arm of government. They don’t execute policy and don’t administer government. I don’t care what glamour puss Danielle Wood’s qualifications are, this job of her’s is the easiest in Australia of not the world.
Curious about the implied logic of the article i.e. ALP government is interfering and tinkering with PC’s ‘independence’ which assumes that there are and have been no other sources of interference of tinkering inc. top end of town, think tanks, RW MSM etc.?
However, the idea to reconfigure its outlook for faster transition to renewable energy sources is sensible, but wait for those other ‘voices’ to emerge from fossil fueled think tanks and RW MSM, to stymie the same.
You don’t think it’s a good idea for Danielle Wood and the PC to examine our push to become a “renewable energy superpower”.
We’re going that way anyway, might as well have someone with Woods expertise checking out the programs. Better than the neoliberal numtpies that have been rehashing BCA talking points the last 30 years and passing them off as PC thoughts
A reminder who was a senior research fellow and later a director at the PC none other than mister coal himself Canavan.
In the distant past, the term Director had no status at the PC and its antecedents. No better than the sort of thing written on consultants’ business cards.
Ye but Danielle Wood is from another neoliberal think tank and an overrated one at that, The Grattan Institute. I fail to see what difference another “female” as head of an agency or corporation is going to make in its performance and decisions and output.
The real nub of the problem is whether the PC is on board in Australia’s transition to zero net carbon emissions by 2050. If the focus is its traditional one, to focus on economic efficiency, it should be made to justify why carbon emitting programs and business decisions don’t have their carbon cost factored in. I have never heard the PC factor in carbon costs as part of their analyses. The PC is dodgy and should all be made to don rural fire service uniforms and put out raging fires. Then they would see the consequences of their non-actions on climate change.
As long as the PC does not push the tired neoliberal agenda, they should be left alone. I do think the PC should be looking towards future challenges more, though.
There are concerns here, particularly what looks like the agenda of Treasury to more closely keep tabs on the PC, which sets the department up nicely to do some bullying. There is a clear advantage to ministers having diverse sources of advice, not to mention having to hear inconvenient information or analysis. Departments prefer they are the only well resourced voices the minister is hearing.
A PC that remained more independent of such surveillance and pressure could still offer robust advice on the degree to which policies were effectively accomplishing the designated aim of “renewable energy superpower”. In fact the aim is so hyperbolic it begs to be smacked down.
On the other hand, let’s not forget the “independent” PC actually has built into it a whole of lot of neo-liberal economic biases of what effective policy is and what accomplishes it. A government with a social democratic or Green agenda does need to directly instruct in order to overcome these biases.