Wednesday, 13 December 2017

Productivity Commission - still useful?

The Productivity Commission – is it still useful?

The Productivity Commission was created as an independent authority by an Act of Parliament in 1998, to replace the Industry Commission, Bureau of Industry Economics and the Economic Planning Advisory Commission. However its roots go deeper, to the establishment of the Industries Assistance Commission in 1974. 

The emphasis on economics continues to this day. The tertiary qualifications shown to be held by the thirteen Commissioners and Associate Commissioners comprise 10 in economics, 3 in law and one each in ethics, commerce, zoology and environmental science; the last two being held by the same Commissioner. 

PC's role
In the preamble of their 2015/16 Annual Report, the PC tells us:
The Productivity Commission is the Australian Government’s independent research and advisory body on a range of economic, social and environmental issues affecting the welfare of Australians. Its role, expressed most simply, is to help governments make better policies, in the long term interest of the Australian community (My emphasis). Later, in the Overview of the report, it states that the PC’s  ‘remit covers all sectors of the economy, with a view to better informing policy making to raise national productivity and living standards

There is no doubt of the conventional economic expertise of the Productivity Commission (but they advise on social and environmental issues!), the range of their remit or the extent of their reporting. But one may question how effective the PC is in the current political scenario of climate change and inequality - not to mention the relentless approach of ecological constraints! It seems too, that the independence of the PC is being compromised by reduced resources and increased Government workload. 

In the Foreword to the Annual Report, the Chair, Peter Harris advises that ‘In 2015-16, the Commission completed six government-commissioned inquiries and studies, as well as six self-initiated research projects but this will not be repeated.’ Ten new Government initiated projects are lined up and this precludes any repeat of the recent high volume of PC initiated research. The Chair also observes, ‘In recent years, Government responses to our reports have been provided in some cases only after substantial delay.’

Competitive neutrality nonsense
Another aspect of the PC that restricts ‘independence’ is that one of its Core Functions  is handling Competitive Neutrality Complaints. The entry reads,  
Competitive neutrality policies aim to promote efficient competition between public and private businesses. Specifically they seek to ensure that Government businesses do not enjoy competitive advantages over their private sector competitors simply by virtue of their public sector ownership.

This bizarre neoliberal concept - the opposite of‘horses for courses’ - is the basis of the new Government enquiry into the ABC and SBS fostered by M/s Hanson’s One Nation party to undermine public broadcasting.

Because Governments have the powers to raise taxes and the Federal Government can and does create currency, they are nothing like businesses so it is not in the public interest to pretend they are and to ‘straight jacket’ government enterprise. 

For example the RBA could offer risk-free accounts to all citizens; this would obviate the need for us ‘taxpayers’ to guarantee the banks because they ‘are too big to fail’ and would free us from the ‘bail in provisions’ which would permit commercial banks to raid the accounts of their customers if this was more politically acceptable than the Government/us’ bailing them out! The RBA could do this simply by virtue of its public sector ownership; commercial bank accounts cannot be risk free. RBA risk-free accounts for all citizens would not acceptable to the Productivity Commission.

The Commission’s legislative ‘instructions’ are summarised in 8 ‘bullet points’. Actions in support of industry, the economy and productivity feature strongly in these; this is in line with the Commission’s history and parentage. Further down, the list itemises that the interest of the community should be ‘recognised’, note just ‘recognised’. 

Productivity's downside
So if we think the Productivity Commission is past its use by date, ideologically constrained and overloaded with establishment economics, what might serve this young nation and its future generations better?

Firstly let us recognise that ‘productivity’ is a two edged sword – especially as the term usually means labour productivity. We produce more – use more resources and increase environmental impacts - with the same labour or produce the same goods and services with fewer jobs. So, accepting our planet’s ecological limits, it is, to coin a phrase, ‘jobs and growth with environmental over-reach or fewer jobs’.

We must accept our planet’s ecological limits; we may not know right now what they are but we know, really know, that for our children and their children’s sakes we must transition to a society hat lives within the limits our ecological resources.

Prosperity without Growth
This is the cogent argument set forth in Professor Tim Jackson’s, Prosperity without Growth (Routledge) Second Edition. We need to plan a way out of ‘The Iron cage of Cosumerism’, recognizing that our addiction to ‘growth’ has trapped our political class into pursuing policies that ensure social stability but are totally unsustainable. ‘An economy predicated the continual expansion of debt-driven materialistic consumption is unsustainable ecologically, problematic socially and unstable economically’, says Tim Jackson.

So, if we disband the Productivity Commission what might we need to help our Australia transition to an economy fit for our future circumstances? An Ecological Commission? A Sustainable Council? A Transition Directorate? A Low-growth Agency?

Prosperity Commission
I cannot go past Tim Jackson’s work! We need a Prosperity Commission - as one of host of new institutions to break free from the ‘economic growth’ addiction and move to a governance and economy, fit for purpose; a society designed and built for the well-being of all citizens within our accepted ecological limits.

Aiming for widespread prosperity? Think of the lift in national spirits! Not threatening austerity, not living within our meanest means, not forever competing to own the latest piece of startling novelty. But building a commonwealth for the best, most fulfilling lives and vibrant communities throughout the nation; our children being educated for living and caring; not primarily getting a job and managing digital devices. Living as if other people, our fellow creatures and our environment mattered.

New PC's role
The new Commission might be announced as follows (with apologies to the old PC!):

The Prosperity Commission is Australia’s research and advisory body on ecological, social and environmental issues affecting the welfare of its citizens. Its role, expressed most simply, is to ensure governments develop policies that encourage inclusive prosperity throughout the community within our ecological limits, in the long-term interests of all life in Australia.

The Commission's legislative ambitions are:-
1.   Determine the ecological limits of the nation
2.   To introduce all necessary legislation and regulatory mechanisms to ensure these limits are regularly updated and firmly maintained
3.   Foster the change from individual consumerism to community integrity and resilience.
4.   To develop policies to give secure, viable land access for housing, education, farming and commerce throughout the nation.
5.   To develop appropriate industries to meet the needs of the nation in individual and socially rewarding ways.
6.   To co-operate with international bodies in the determination and policing of ecological limits.

Such a body would require a broad range of disciplines, not just economists with a similar range of affiliations.  And maybe not all appointees of the Governor General.
Would the Prosperity Commission be an early proclamation of our first directly elected Australian President? It is too urgent for that – but do get your copy of Tim Jackson’s, Prosperity without Growth; it is a stimulating and encouraging read, charting a course that needs to be travelled. If you are pessimistic and half-hearted about the prospects, read the last two chapters first! The Progressive State and A Lasting Prosperity will brighten your horizons.

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