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You can find the current article at its original source at https://www.theguardian.com/australia-news/2017/oct/29/why-this-government-cant-put-good-economic-advice-to-productive-use
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| Why this government can't put good economic advice to productive use | Why this government can't put good economic advice to productive use |
| (4 months later) | |
| On Tuesday the Productivity Commission released its first “five-year productivity review”, and if it feels like five years have already passed since that day, that gives you an idea of how unlikely it is that any of the recommendations will come into being. | On Tuesday the Productivity Commission released its first “five-year productivity review”, and if it feels like five years have already passed since that day, that gives you an idea of how unlikely it is that any of the recommendations will come into being. |
| Productivity Commission reports are always cherry-picked by any government. To an extent, that is not a bad position to take – just because the Productivity Commission recommends something should be done does not automatically mean it should be done. | Productivity Commission reports are always cherry-picked by any government. To an extent, that is not a bad position to take – just because the Productivity Commission recommends something should be done does not automatically mean it should be done. |
| In the past, the commission has, for example, made recommendations about the workplace relations system, despite noting that: “There is little robust evidence that the different variants of WR systems over the last 20 years have had detectable effects on measured economy-wide productivity.” | In the past, the commission has, for example, made recommendations about the workplace relations system, despite noting that: “There is little robust evidence that the different variants of WR systems over the last 20 years have had detectable effects on measured economy-wide productivity.” |
| It justified its recommendations despite this lack of evidence by claiming that just because there is no evidence “this does not mean there are no effects” – merely that they are “hard to identify”. | It justified its recommendations despite this lack of evidence by claiming that just because there is no evidence “this does not mean there are no effects” – merely that they are “hard to identify”. |
| Life is always a lot easier when you can brush aside a lack of evidence and carry on, a path the Productivity Commission seems quite happy to take. In its recent report on the impact of the goods and services tax on horizontal fiscal equalisation, it argued that the GST distribution system created a disincentive for state governments to pursue economic reform despite the fact that: “There is no direct evidence that such incentives have changed specific policy decisions.” | Life is always a lot easier when you can brush aside a lack of evidence and carry on, a path the Productivity Commission seems quite happy to take. In its recent report on the impact of the goods and services tax on horizontal fiscal equalisation, it argued that the GST distribution system created a disincentive for state governments to pursue economic reform despite the fact that: “There is no direct evidence that such incentives have changed specific policy decisions.” |
| This time it brushed aside the lack of evidence by stating: “An absence of evidence is not evidence of absence”. | This time it brushed aside the lack of evidence by stating: “An absence of evidence is not evidence of absence”. |
| So let us disabuse ourselves of the notion that the Productivity Commission is not above pushing an agenda based on ideological positions. But that does not mean its reports should be easily dismissed – for example, its recommendations made earlier this year for reforming the superannuation industry have a great deal of merit. | So let us disabuse ourselves of the notion that the Productivity Commission is not above pushing an agenda based on ideological positions. But that does not mean its reports should be easily dismissed – for example, its recommendations made earlier this year for reforming the superannuation industry have a great deal of merit. |
| This week’s review contained numerous recommendations across a wide variety of areas, from health to higher education. Many of the recommendations would be politically difficult such as road-user congestion charges and introduction of a land tax in place of stamp duty. | This week’s review contained numerous recommendations across a wide variety of areas, from health to higher education. Many of the recommendations would be politically difficult such as road-user congestion charges and introduction of a land tax in place of stamp duty. |
| But honestly, no one is all too excited – not only because these recommendations have all been seen before, but because no one really believes there is any drive or ability within government to have such recommendations implemented. | But honestly, no one is all too excited – not only because these recommendations have all been seen before, but because no one really believes there is any drive or ability within government to have such recommendations implemented. |
| Instead, the review just becomes a vehicle to make it seem like there is support for things the government was already doing. | Instead, the review just becomes a vehicle to make it seem like there is support for things the government was already doing. |
| When the treasurer Scott Morrison gave a speech on Tuesday morning launching the review, he began with a preamble about the need for company tax cuts – despite the commission making no mention at all of them. | When the treasurer Scott Morrison gave a speech on Tuesday morning launching the review, he began with a preamble about the need for company tax cuts – despite the commission making no mention at all of them. |
| He also verballed the commission when he argued:“The commission rightly priorities fixing the energy mess and we are fixing it.” | He also verballed the commission when he argued:“The commission rightly priorities fixing the energy mess and we are fixing it.” |
| The commission did indeed argue, as Morrison noted, that “the costs of getting the energy system wrong are too large to contemplate”, but it also noted the government’s response to the Finkel review – in which it adopted 49 of the 50 recommendations – that “49 out of 50 is not a pass mark”, a line Morrison not surprisingly did not include in his speech. | The commission did indeed argue, as Morrison noted, that “the costs of getting the energy system wrong are too large to contemplate”, but it also noted the government’s response to the Finkel review – in which it adopted 49 of the 50 recommendations – that “49 out of 50 is not a pass mark”, a line Morrison not surprisingly did not include in his speech. |
| The commission was pretty unequivocal about what needed to be done – “governments need an emissions target to provide certainty for the sector” – and it also said Australian governments “must work cooperatively to resolve the issues”. | The commission was pretty unequivocal about what needed to be done – “governments need an emissions target to provide certainty for the sector” – and it also said Australian governments “must work cooperatively to resolve the issues”. |
| And how did the commission outline this must be done? Again, it clearly stated: “They must stop the piecemeal and stop-start approach to emission reduction, and adopt a proper vehicle for reducing carbon emissions that puts a single effective price on carbon.” | And how did the commission outline this must be done? Again, it clearly stated: “They must stop the piecemeal and stop-start approach to emission reduction, and adopt a proper vehicle for reducing carbon emissions that puts a single effective price on carbon.” |
| A single, effective price on carbon. | A single, effective price on carbon. |
| That wasn’t a line that has received much of a workout this week from the government, and even if you believe, as Morrison does, that the new energy policy “delivers on the commission’s demand for government to provide certainty”, the government still has a lot of work to actually move from promising certainty to delivering it. | That wasn’t a line that has received much of a workout this week from the government, and even if you believe, as Morrison does, that the new energy policy “delivers on the commission’s demand for government to provide certainty”, the government still has a lot of work to actually move from promising certainty to delivering it. |
| And a big problem with its energy policy is the same one that applies to many of the recommendations in the commission’s review. | And a big problem with its energy policy is the same one that applies to many of the recommendations in the commission’s review. |
| Almost all the recommendations require cooperation between the federal and state governments. Whether it be introducing congestion taxes, removing stamp duty and shifting to a land tax, or overhauling the very protected pharmacy industry, there is a need for governments to work in sync. | Almost all the recommendations require cooperation between the federal and state governments. Whether it be introducing congestion taxes, removing stamp duty and shifting to a land tax, or overhauling the very protected pharmacy industry, there is a need for governments to work in sync. |
| The review’s recommendation for tax reform was not about cutting company tax but rather for “a commitment to tax changes that improve revenue-sharing arrangements between governments” – ie back to the GST carve-up issues. | The review’s recommendation for tax reform was not about cutting company tax but rather for “a commitment to tax changes that improve revenue-sharing arrangements between governments” – ie back to the GST carve-up issues. |
| Many of the recommendations require governments taking on powerful lobby groups, powerful inter-state political forces and often introducing measures that will see some sections of the public paying more. | Many of the recommendations require governments taking on powerful lobby groups, powerful inter-state political forces and often introducing measures that will see some sections of the public paying more. |
| To overcome such forces, a heck of a lot of working together and goodwill will be required – the same that will be needed for the government’s national energy guarantee to come into being. | To overcome such forces, a heck of a lot of working together and goodwill will be required – the same that will be needed for the government’s national energy guarantee to come into being. |
| And yet a look at parliament this week saw the government continue to criticise the opposition and specifically the South Australian government. | And yet a look at parliament this week saw the government continue to criticise the opposition and specifically the South Australian government. |
| On Wednesday, the prime minister Malcolm Turnbull told parliament: “Australians are living with higher electricity prices and less reliable electricity because of Labor policies, and none more so than the people of South Australia.” | On Wednesday, the prime minister Malcolm Turnbull told parliament: “Australians are living with higher electricity prices and less reliable electricity because of Labor policies, and none more so than the people of South Australia.” |
| The treasurer followed up by arguing: “We can’t allow the Labor experiment in South Australia, which has failed and continues to fail.” | The treasurer followed up by arguing: “We can’t allow the Labor experiment in South Australia, which has failed and continues to fail.” |
| And yet within a few sentences he railed that: “It’s time for the Labor party to get on board with the national energy guarantee, to ensure that we have bipartisanship in this place”. | And yet within a few sentences he railed that: “It’s time for the Labor party to get on board with the national energy guarantee, to ensure that we have bipartisanship in this place”. |
| Ah yes, always good to blast an opponent as a failure and an economic vandal, and then call for bipartisanship. | Ah yes, always good to blast an opponent as a failure and an economic vandal, and then call for bipartisanship. |
| A government’s call for bipartisanship, of course, always means a call for others to agree with it, but there is little compunction for state governments to do so – let alone Bill Shorten’s opposition. | A government’s call for bipartisanship, of course, always means a call for others to agree with it, but there is little compunction for state governments to do so – let alone Bill Shorten’s opposition. |
| A strong, stable federal government might be able to get away with demanding others come to heel, but as the events of this week show, the Turnbull government is anything but that. | A strong, stable federal government might be able to get away with demanding others come to heel, but as the events of this week show, the Turnbull government is anything but that. |
| It’s a government that is clearly badly wounded and in desperate need of assistance to get any major policy done, but all the while it berates those whose assistance it needs and acts with an arrogance it has little cause to possess. | It’s a government that is clearly badly wounded and in desperate need of assistance to get any major policy done, but all the while it berates those whose assistance it needs and acts with an arrogance it has little cause to possess. |
| So, yes, there are many recommendations in the Productivity Commission’s report. Some even are worthy of consideration. But should the government continue to act like it is, there is little fear of any of the proposals – or its energy policy – being implemented. | So, yes, there are many recommendations in the Productivity Commission’s report. Some even are worthy of consideration. But should the government continue to act like it is, there is little fear of any of the proposals – or its energy policy – being implemented. |
| Productivity Commission | Productivity Commission |
| Grogonomics | Grogonomics |
| Australian politics | Australian politics |
| GST | |
| Scott Morrison | Scott Morrison |
| Labor party | Labor party |
| Malcolm Turnbull | Malcolm Turnbull |
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