Submission to the Productivity Commission 5 year productivity review: Increasing Australia’s Fu-ture Prosperity

The submission by CIS Research Fellow Michael Potter argues:

  • An excellent productivity boosting agenda is contained in a speech by the former chair of the Productivity Commission, Gary Banks, “Productivity Policies: the ‘to do’ list” in 2012.
  • The Commissions should not reject policies that may reduce measured productivity but make Australia better off. In particular, policies that increase the utilisation of existing resources should not be ruled out solely because of their effect on measured productivity. This includes policies to: increase labour force participation; increase land use; increase use of existing properties (eg AirBnB) or cars (Uber); and increase use of utilities through peak load pricing.
  • The Commissions should consider regular reporting on distributional issues, including the capital vs labour share of national income, but should focus on the issues underlying inequality (such as poverty) rather than inequality itself.
  • Several CIS research papers are of relevance to this inquiry, including papers relating to Indigenous programs, charter schools and health policies.
  • The Commission should consider reform process ideas including:

o   reinstating payments to State governments that undertake reform;

o   reducing or removing the disincentives for reform inherent in the GST distribution formula;

o   expand independent evaluation of existing programs

o   require Regulation Impact Statements to be prepared independently of government.

  • The existing measures of productivity only cover part of the economy and society, excluding most of government, education and health. Non-market issues such as home production, urban amenity, travel times and pollution are also generally excluded. The Commission should endeavour to develop yearly measures of productivity changes in the non-market sector.