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.
