Productivity Commission head Gary Banks lays out our path to poverty

Former Productivity Commission head Gary Banks has launched a blistering, pungently timely, and desperately welcome attack on our – quite literally – mindless march to a seriously poorer future.

In an interview with The Australian newspaper, Banks didn’t put it quite like that. That’s my summation of the full and unavoidable import of what he was both lamenting and warning about. That is “policies that have damaged our economy’s ability to cope with change, to be competitive and support economic growth”.

Where else, do you think that trio of failure – inability to cope with change, to be competitive, to maximise, even just to have, economic growth – would lead?

To a South Korean, a Singaporean-style, dynamo? Indeed, even to the very same Australia that had been emerging in the 2000s, before everything was quite deliberately turned to custard? That destroyed future for Australia – indeed, a destroyed Australia - lies almost now unavoidably at the end of the path on which we have so determinedly but so mindlessly embarked.

Banks focused on two – standouts, as he put it. The first – and to my mind, and I would suggest probably to Banks as well, overwhelmingly disastrous one – was “the monumental bungling of the so-called energy transition”. This was in which our governments had “contrived to maximise the cost to the nation of reducing emissions”, as Bank summarised it. The other was “the U-turn on workplace regulation, taking it back towards the sort of centralised (I would add, almost medieval) regime of pre-Hawke/Keating days”

“Historically, this country’s low energy costs (had) partly offset the high self-imposed burdens of our rigid labour market.”

Productivity Commission chair Professor Gary Banks.

That’s no longer the case. In fact, Banks noted, “we’ve brought about the opposite situation”. “On the one hand, we have been busily eliminating our comparative advantage in energy, while on the other we are reviving our traditional disadvantage with respect to labour”.

“How did we get to a situation in which electricity will not only become a luxury but an unreliable one?” Banks lamented. What’s worse, Banks went on, we are now in the situation where it’s become impossible to openly discuss the best way forward. Any attempt to use evidence or logic immediately brands you as a “denier”. As even Shemara Wikramanayake, the CEO of Macquarie - which is heavily invested in renewables - recently said: “You can’t shut up what we have until we have the solutions.” But that’s exactly what’s happening – as coal-fired stations are blown up. And, Banks added, as if that wasn’t bad enough, “governments are making it hard for gas to step into the breach – and are dismissing nuclear out of hand”.

That seems to me a pretty basic definition of monumental stupidity wrapped up in basic lunacy; the writing of a national suicide note, as I put it in the days of a rampaging Rudd.

Then add what’s happening with IR. Yes, Banks argues, that it’s been a “policy disaster zone” for as long as he can remember. He likes the Hawke-Keating deregulation; he lambasts what happened through the successive Coalition governments after that.

But it’s the latest moves that have him really worried; designed to further boost union power and guaranteed to undermine all-important productivity. Those are the main two that have him worried. But he goes on.

A tax system undermining growth, infrastructure spending aimed at short-term politics; a return to subsidies for ”favoured” industries; a fat and flatulent public sector, which thrived (thanks to government) through Covid as so many in the private sector were battered and destroyed. This and more was all wrapped up, as Banks argued, in increasing distrust of government; and on to Third World-style “sovereign risk”. I would add, as a footnote, the stunning failure of business leaders to speak up as Banks has done.